A new survey by actuarial firm Normandin Beaudry has found that Canadian employers plan on boosting their salary budgets by an average of 3.8 percent in 2023. This is the second consecutive year that salaries budgets are on the rise.
Furthermore, the survey of more than 750 companies and nearly 1.8 million employees across Canada found that only 1 percent of organizations froze salaries in 2022, or intend to do so during the remainder of the year — which is low by historical standards that typically hover around 3-5 percent. And it is especially low compared to 2021, when due to the pandemic 8 percent of organizations implemented a salary freeze.
The overall results of this recent survey comes as no surprise given the current economic environment and the ultra-competitive labour market,” commented Darcy Clark, Principal, Compensation, at Normandin Beaudry. “Employers continue to adapt to market pressures as evidenced by the results of our survey…Organizations that proactively plan for additional budgets will benefit from greater agility throughout the year, such as retaining employees in critical roles, differentiating rewards for high performers, and accelerating the progression of employees in the lower end of their pay range.”
Other findings of the survey include:
- Nearly half of Canadian organizations allocated an additional budget of 1.9 percent on average in 2022, which was higher than the initial forecast of 1.2 percent.
- For 2023, projections reveal that 33 percent of organizations plan to grant an additional budget of 1.4% on average.
- The largest salary budget increases in 2023 is expected by private sector organizations not listed on the stock market (4 percent), followed by private sector organizations listed on the stock market (3.7 percent), not-for-profit organizations (3.5 percent), and public sector organizations (3.1 percent).
- Small businesses with fewer than 50 employees are planning to increase their salary budgets in 2023 by 4.5 percent, while organizations with 50-99 employees project an increase of 4.1 percent, and organizations with 100-199 employees project an increase of 4 percent.
- Across all provinces and territories, organizations in Quebec plan on increasing salary budgets the most in 2023 (4.1 percent), followed by Ontario (3.9 percent), British Columbia (3.7 percent), Northwest Territories (3.7 percent), Newfoundland and Labrador (3.7 percent), Alberta (3.6 percent), New Brunswick (3.6 percent), Manitoba (3.6 percent), Nova Scotia (3.6 percent), Yukon (3.6 percent), Saskatchewan (3.5 percent), Nunavut (3.4 percent), and Prince Edward Island (3.3 percent).
Concludes the survey report: “For a second straight year, we’re observing salary increases that showcase the agility of organizations to address difficult economic and labour market conditions. However, caution is advised, especially in the face of a looming recession. There are many other measures in an organization’s arsenal to tackle such issues, some that do not necessarily require an increase in fixed costs as wage increases imply. When we surveyed employees last fall, flexibility was the top reason they cited for remaining with their current employer, with salary coming in third place. Therefore, reviewing your employee value proposition can take on many other forms and have a lasting, sustainable impact on talent retention.”