Royal Bank of Canada is spending more than $200 million (US$155 million) on pay increases, boosted retirement benefits and other incentives to retain employees amid stiff competition for workers.

The Toronto-based bank is raising base salaries in the four lowest levels of its pay scale, accounting for almost half of its workforce, by 3 per cent starting July 1 to “address the market pressures and the rising cost of living,” Chief Executive Officer David McKay said in a memo to employees Monday.

“We are committed to continuing to be a leading employer of choice -- one that supports your unique life and career goals, in addition to being an inclusive culture and a great place to work,” McKay said in the memo.

Royal Bank, which has almost 90,000 employees globally, is trying to retain talent as Canada’s labor market remains tight, with the unemployment rate dropping to a record low in April. McKay has said that the demand for top talent, especially workers with math and coding skills, is among his top concerns for the bank this year.

In addition to the midyear raises, McKay told employees that Royal Bank will consider the “unique market forces” when setting base salary pools at the end of the year. The firm also is increasing employer contributions to the Canadian Defined Contribution Pension plan over two years, starting in January 2023. The lender is enhancing its benefits in Canada for fertility, surrogacy and adoption services starting in July, and said it will explore similar offerings in other regions.

Royal Bank also is starting a paid sabbatical program for employees globally “who reach key service milestone anniversaries” with the firm, McKay said.

Shares of Royal Bank, Canada’s largest lender by market value, fell 0.6 per cent to $128.80 at 9:58 a.m. in Toronto, amid broader market declines. The stock is down 4.1 per cent this year, compared with a 5.1 per cent drop for the S&P/TSX Commercial Banks Index.