Lucky Calgary workers received the highest average salary increases among Canadians across the country this year, according to a recently released national salary survey.

Employers are starting to demonstrate a renewed confidence in the economy by redirecting their energy away from cost-cutting measures such as wage freezes to more formal incentive and compensation plans, says Watson Wyatt Worldwide, a human resource consulting firm.

In its 35th annual Canadian Salary Survey, released last week, the company said Calgary businesses granted the highest salary increases at 3.4 per cent, down slightly from 3.6 per cent the previous year. The 2004 forecast for salary increases in Calgary is 3.3 per cent.

Figures for Edmonton were not available at press time. In comparison, Toronto workers saw increases of 3.3 per cent, with no change forecast for next year.

Atlantic Canada experienced a 3.3- per-cent increase, up from 3.1 per cent in 2002, with a 3.2-per-cent increase forecast for 2004.

“Given the reduction in the number of companies implementing wage freezes and the consistent forecast in salary increases among the various industries and levels of jobs, together with the increase in pay-for-performance plans, it becomes evident that companies are using short- and long-term incentives to differentiate compensation,” said Graham Dodd, Watson Wyatt’s national director, Human Capital Group.

Eighty-six per cent of respondents in 444 organizations surveyed indicated that they employed some kind of short-term incentive plan in 2003, up from 81 per cent in 2002.

Of those, 89 per cent have formal short-term incentive plans in place, an increase from 81 per cent the year before and 78 per cent in 2001.

Ninety-two per cent of companies reported they granted salary increases this year, up from 89 per cent in 2002. However, of those organizations providing increases, the average actual salary increase for all employees this year was 3.3 per cent, a moderate decline from the 3.4 per cent actual increase in 2002.

The average salary increase for executives dropped further from 3.9 per cent last year to 3.5 per cent in 2003.

“There is still some uncertainty out there but the findings are showing that companies are better managing the resources they currently have” added Dodd.

Meanwhile, another salary survey by human resources firm Hewitt Associates projects average salary increases for 2004 will be 3.3 per cent overall, just a slight increase over the 2003 actual average salary increase of 3.2 per cent.

“This virtual standstill in both projected and actual salary hikes indicates a more cautious outlook among Canadian companies than we saw a year ago,” said Todd Mathers, a compensation consultant in Hewitt’s Toronto office.

“We might have seen more optimism with regard to 2004 were it not for the wide array of events challenging the Canadian economy this year, including geopolitical tensions, continued sluggishness of the U.S. economy, softwood lumber tariffs and the impact of SARS.”

Historically, about one per cent of organizations participating in the Hewitt survey have reported freezing salaries. This figure jumped to seven per cent in 2002, and for 2003, eight per cent of respondents reported implementing a salary freeze.

In 2004, Calgary is once again projected to lead the nation with average increases of 3.7 per cent. Toronto (3.4 per cent) and Montreal (2.9 per cent) are expected to show modest gains, while Vancouver is projected to fall to 2.9 per cent.