National asking rent climbs 1.5% from February but remains down year-over-year in March
The recent decline in rental prices across Canada has provided employers and plan sponsors with a temporary alleviation of compensation pressures.
According to Rentals.ca and Urbanation, the national average asking rent decreased to $2,119 in March, marking a 2.8 percent drop from March 2024.
This reduction may lessen the immediate need for employers to increase wages or living allowances, particularly in major urban centres.
However, union leaders caution that this relief is overshadowed by broader economic instability and sector-specific downturns that threaten job security and the sustainability of pensions and benefits.
In an article by Benefits and Pension Monitor, the recent shutdown of the Stellantis assembly plant in Windsor, Ontario, has intensified these concerns.
Canadian Labour Congress (CLC) executive vice president Siobhan Vipond highlighted the precarious position of workers, noting that reduced work hours or employment gaps can lead to lost pension credits and lapses in health benefits.
She emphasized the need for a collaborative approach involving employers, government, and workers to address these challenges.
Employers are also grappling with the implications of these economic shifts on their compensation strategies.
While declining rents may offer some respite, the overall economic environment, characterized by inflation and job losses, continues to exert pressure on compensation budgets.
According to a survey by Mercer, Canadian employers are budgeting 3.4 percent for merit increases and 3.9 percent for total budget increases in 2023, up from 2.6 percent and 2.8 percent respectively in 2022.
Furthermore, the decline in employer-sponsored pension plans has shifted the onus of retirement planning onto individuals, leading to concerns about a 'retirement deficit.'
According to Benefits and Pension Monitor, only approximately 9 percent of Canadians in the private sector have access to a defined benefit pension plan. This underscores the need for employers to reassess their role in supporting employees’ long-term financial security
In response to these multifaceted challenges, there is a growing call for a tripartite approach involving employers, government, and labour representatives to collaboratively develop strategies that safeguard pensions and benefits during economic downturns.
Such collaboration is essential to ensure that short-term gains from factors like falling rents do not overshadow the need for long-term stability in employee compensation and benefits.
