Canadian employers expect to raise wages by an average of 2.5 per cent in 2016, according to an annual survey by human resources firm Morneau Shepell.

That's less than the average 2.8 per cent they had expected wages would rise in 2015, and reflects the deteriorating economic picture in Canada.

"I think with the crash in oil prices and talk of a recession, employers are being more cautious," said Randal Phillips, executive vice president at Morneau Shepell.

Phillips said the figures reflect the financial health of the employer as well as what is happening in the economy.

The figures are not actual wage increases but a forecast given by human resources managers based on an online survey of 255 employers across the country. The research was down by Morneau Shepell between mid-June and the end of July 2015, with input from organizations representing a broad cross-section of industry sectors.

Statistics Canada's most recent data for May 2015 showed average weekly earnings across the country were up 1.4 per cent from a year earlier. 

Traditionally, the Morneau Shepell survey has found wage hikes were anticipated to be higher in Western Canada, including Alberta and British Columbia.

But this year's results show greatly reduced expectations in Alberta, with wage increases for 2016 projected at 2.2 per cent, down from the 3.4 per cent anticipated for 2015.

Wage hikes in other Western provinces are still projected to be above the national average.

Mental health in workplace

Phillips said human resource managers are reporting a renewed focus on mental health among their employees, as absenteeism and low productivity related to poor mental health is a drain on the workplace.

The Conference Board of Canada estimated earlier this year that mental illness costs employers more than $20 billion per year.  

"Employers are coming to terms with the idea that they have to deal with it," Phillips said.

Some said they were putting resources toward training managers in understanding mental health as they were the most likely to notice performance issues and social problems in the workplace.

Over half of employers responding to the survey expect to have mental health training for managers in place by the end of next year, and 28 per cent are developing plans to address psychological health and safety in their workplaces.