Royal Bank of Canada RY-T is raising base pay by 3 per cent for its lower-paid employees as part of a $200-million spending package that aims to fend off fierce competition for talent by improving salaries and benefits.
The unusual increase takes effect on July 1, and applies to all employees in a range of entry-level and less senior positions, including at branches, call centres and other divisions. Collectively, the employees receiving raises make up nearly half of all RBC staff, and chief executive officer Dave McKay said in a company memo that the raises are intended “to address the market pressures and the rising cost of living that is having a greater impact on colleagues in lower salary bands.”
He said RBC, which has more than 85,000 full-time equivalent employees, will take those market forces into account when the bank calculates its normal salary increases at the end of the fiscal year in October. Many other RBC employees, including those in senior roles, receive a significant amount of their pay from commissions or bonuses, which also surged in a busy year for traders and investment bankers. That has been a key factor driving costs higher for many banks over the past year.
RBC’s decision to boost employee compensation comes as tight labour markets and rising inflation are making it harder to retain talent and driving up expenses for businesses. Mr. McKay has said that a “massive” imbalance between demand and supply for labour is emerging as a top concern for business leaders. That has been exacerbated by high inflation, which means that rising prices are outpacing wage gains for two-thirds of Canadians by some estimates.
With unemployment at its lowest level in nearly 50 years, businesses are in a fight to attract and keep employees, especially people with specific skills in specialized technology roles. Mr. McKay has said emerging industries have created new jobs in Canada, but that hasn’t significantly reduced the need for people to fill existing roles in more traditional sectors, which contributes to wage inflation.
The competitive pressure to keep employees happy is evident in Canada’s banking sector. Last month, Toronto-Dominion Bank – which is RBC’s largest competitor in Canada – promised a 3-per-cent pay raise to most of its employees in July, and $1,500 cash bonuses to some other staff.
On Monday, RBC also said it will contribute more to employee pensions over two years, enhance benefits for fertility and surrogacy services and adoption, and add a paid sabbatical program for staff when they reach employment anniversaries. The bank also promised more flexibility for staff to work both in the office and remotely, as well as improved training and education opportunities.
In recent years, RBC has also created hubs to attract technology staff in cities such as Calgary, where the bank plans to hire 300 people, as well as Bedford, N.S., and Montreal. It is an attempt to tap an expanded pool of talent outside the largest cities, and to capitalize on the greater mobility of labour as remote working becomes more common.
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James Bradshaw