Inflation is rising. Will salaries keep up?
It’s no surprise if grocery and gasoline prices have made you gulp lately.
Canada’s inflation rate hit an 18-year high of 4.4 per cent in September, the ninth month in a row that basic items like food, housing and transportation got more expensive. And it’s not a blip. The Bank of Canada predicts higher inflation rates will continue for the next year.
In this environment, people may start expecting their annual salary bumps to keep up with inflation rates. If not, employers may start to see employees looking for new jobs once they’ve landed their year-end bonuses.
Right now, job seekers have a bit of an upper hand as employers compete to hire in a hot market. It’s much cheaper to keep an employee happy than it is to find, hire and train a replacement, so we would advise employers to rethink their standard 2 per cent annual pay increase. Matching inflation – or even offering a bigger bump of 6 to 8 per cent – could be less expensive than counter-offering or, worse, starting over when someone resigns for more money.
