Royal Bank of Canada (RBC) is to raise its base pay by 3% for lower-paid employees as part of a $200 million (£124.6 million) spending package.
The increase, which will take effect on 1 July, applies to all employees in entry-level and less senior positions at branches, call centres and other divisions. According to the bank, the aim of the pay rise is to fend off fierce competition for talent by improving salaries and benefits.
According to a business-wide memo sent by chief executive officer Dave McKay, the employees receiving the pay increase make up nearly half of all RBC staff. The decision to boost employee compensation has been made as tight labour markets and rising inflation are making it harder to retain talent, with the raise intended to address the market pressures and the rising cost of living that is having a greater impact on colleagues in lower salary bands.
McKay added that the pay rise will address an imbalance between demand and supply for labour, which is emerging as a top concern for business leaders and has been exacerbated by high inflation and rising prices outpacing wage gains for many Canadians.
RBC, which has more than 85,000 full-time employees, will take market forces into account when the bank calculates its normal salary increases at the end of the fiscal year in October.
RBC is also to contribute more to employee pensions over two years, enhance benefits for fertility and surrogacy services and adoption, and add a paid sabbatical programme for staff when they reach employment anniversaries. The bank has also promised more flexibility for staff to work both in the office and remotely, as well as improved training and education opportunities.