TORONTO — Even Alberta's formerly booming economy is beginning to feel the effects of the recession. According to the results of the third salary increase survey it has conducted in the last nine months, Hewitt Associates, a global human resources consulting and outsourcing company, has determined that projected salary increases for 2009 across all job categories have dropped by close to three per cent of base pay in Alberta

"For our most recent survey, we surveyed only Alberta employers," said Jeff Vathje, a senior compensation consultant in Hewitt's Calgary office. "Our discussions with organizations across the country suggest that employers in other parts of the country have settled on 2009 salary increases, while those in Alberta are still in 'wait and see' mode." The most recent survey, conducted last month, indicates that between 40 and 50 per cent of Alberta employers have yet to finalize salary increases for some or all job categories.

When Hewitt conducted its annual salary increase survey last May, Alberta employers were projecting average salary increases of 5.13 per cent. By October, that figure had dropped to 3.96 per cent. The latest survey has Alberta employers forecasting average increases of 2.0 to 2.5 per cent, depending on the employee group.  Of the 52 Alberta organizations that responded to the survey, 60 per cent were from the energy/utilities industry.

"Increases for executive salaries have been carved back the most — from 5.4 per cent in May 2009 to around two per cent in February 2009," stated Vathje. "In addition, 19 per cent of employers have implemented salary freezes for some or all groups of employees, particularly executives." Bonuses, however, are still relatively high, as they are based on 2008 performance. Variable compensation budgets are also optimistic, indicating that employers continue to be willing to reward high performers.

Vathje recommends that Alberta employers step back during this period of uncertainty and consider how best to keep top talent motivated and engaged. "During the boom economy in this province, Alberta organizations offered dramatic salary increases in order to keep up with competitors," said Vathje. "The economic downturn provides an opportunity to pause and consider a more strategic approach before taking action. While others continue to reforecast their pay budgets, employers that implement a strategy will be able to get off the salary increase treadmill."

The survey also asked about tactics Alberta organizations are taking to deal with economic challenges. There are few plans for downsizing or lay offs, although hiring freezes are becoming increasingly prevalent. Instead, employers are limiting discretionary spending (i.e., travel restrictions, limited spending on social events) and introducing increased rigor in order to control spending and reduce costs.

"A strategic approach to compensation that is geared to retaining high performers, combined with measures designed to manage a company's bottom line, will ensure that Alberta employers are in a strong position when the economy recovers," stated Vathje.

About Hewitt Associates

Hewitt Associates (NYSE: HEW) provides leading organizations around the world with expert human resources consulting and outsourcing solutions to help them anticipate and solve their most complex benefits, talent, and related financial challenges. Hewitt consults with companies to design and implement a wide range of human resources, retirement, investment management, health management, compensation, and talent management strategies. As a leading outsourcing provider, Hewitt administers health care, retirement, payroll, and other HR programs to millions of employees, their families, and retirees. With a history of exceptional client service since 1940, Hewitt has offices in 33 countries, including Canadian offices in Toronto, Montreal, Vancouver, Calgary and Regina, and employs approximately 23,000 associates who are helping make the world a better place to work. For more information, please visit www.hewitt.com/canada.