Canadian employers expect to maintain the status quo on pay raises next year, according to a new survey released by Willis Towers Watson.

The 2018 General Industry Salary Budget Survey found Canadian employers project to give professional and client management employees average pay increases of 2.8% in 2019, unchanged from 2018. Production and manual labor employees can expect an increase next year of 2.7%, the same increase as this year.

Executives’ increases may edge down next year to 2.8% from 2.9%, while steady increases are planned for management employees at 2.8% and business and technical support employees at 2.8%. Only 3% of companies plan to freeze salaries next year. Pay raises have hovered around 3% for the past decade.

The continued tightening in the Canadian labor market will mean that organizations will struggle to retain employees with limited increases in salary budgets, according to the report. Organizations are looking for more efficient ways to use their limited budgets and are rethinking how and when they give increases.

The survey found companies continue to reward their star performers with significantly larger pay raises than average performing employees. Professional employees receiving the highest possible rating received an average increase of 4.7% this year, nearly double the 2.4% increase granted to those receiving an average rating.

“Most companies are not under pressure to significantly increase their salary budgets in the near term,” said Sandra McLellan, North America Rewards business leader at Willis Towers Watson. “Companies are relying more on variable pay such as annual incentives and discretionary bonuses to recognize and reward their best performers. At the same time, they are rewarding star performers with substantially larger increases while granting minimal increases, if any, to their weakest performers.”

Companies project discretionary bonuses — generally paid for special projects or one-time achievements — will average 5.3% of salary for professional and client management employees, somewhat higher than companies budgeted for this year. Slightly larger discretionary bonuses are planned for most employee groups. Annual performance bonuses, which are generally tied to company and employee performance goals, are projected to hold steady in 2019 for all employee groups.

The survey was conducted between April and July 2018, and includes responses from 366 Canadian companies representing a cross-section of industries.