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Salary survey: What are Canadian employers planning for 2024 and which sectors will see the highest increases?
Salary increases are a key component of any compensation strategy. They reflect the economic conditions, the labour market dynamics, and the organizational performance and objectives. They also influence the attraction, retention, and motivation of employees, as well as their satisfaction and engagement at work.
But how do Canadian employers plan their salary increases for the upcoming year? What are the factors and challenges that affect their decisions? And which sectors and regions are leading the way in terms of salary growth?
These are some of the questions that a recent survey by Normandin Beaudry, a consulting firm, aimed to answer[1]. The survey, which involved more than 700 organizations across Canada, revealed some interesting insights and trends about the salary increase landscape in Canada for 2024.
The main findings from the survey
According to the survey, the average salary increase forecast for 2024 in Canada is 3.6%, excluding salary freezes.
This is slightly lower than the actual salary increase granted in 2023, which reached 4.1%, exceeding the initial projections of 3.8% and 4.2% published in February 2023 and July 2023, respectively.
The survey also found that only 1% of organizations implemented salary freezes in 2023, while 2% of organizations are forecasting a salary freeze for 2024. These numbers are significantly lower than the pre-pandemic levels, which ranged from 3% to 5%, indicating that most Canadian employers are meeting or exceeding the expectations and preferences of their employees when it comes to salary increases.
Also indicated are the challenges faced by Canadian employers \ when planning their salary increases for 2024, such as:
- The uncertain economic climate and the evolving inflation rate, which may affect the purchasing power and the cost of living of employees
- The difficult labour market conditions and the talent shortage, which may increase the competition and the turnover risk for skilled and critical employees
- The changing needs and preferences of employees, who may value more flexibility, personalization, and transparency in their compensation and benefits
- The equity, diversity, and inclusion issues, which may require more attention and action to ensure fair and consistent pay practices across the organization.
Stategies and Tactics for 2024
To address these challenges and pressures, Canadian employers are adopting various strategies and measures, such as:
- Taking a proactive and agile approach in managing their salary budgets and adjusting them according to the market changes and the organizational performance
- Allocating additional salary-related funding to target specific groups or purposes, such as market adjustments, retention incentives, high performers rewards, internal equity corrections, and off-cycle increases.
- Enhancing their total rewards programs and offering more benefits and perks that support the physical, mental, and financial well-being of employees, as well as their work-life balance.
- Communicating clearly and frequently with employees about their compensation and benefits, and providing them with more information and feedback on their pay and performance.
- Reviewing and updating their pay policies and practices to ensure they are aligned with the best practices and the legal requirements, and to promote a culture of equity, diversity, and inclusion.
The sector and regional variations
The survey also revealed some variations in the salary increase forecasts for 2024 across different sectors and regions in Canada.
By sector, the following sectors reported the highest forecasted salary increases for 2024, excluding salary freezes:
- Professional, scientific and technical services: 3.9%
- Real estate, rental and leasing: 3.9%
- High technology: 3.9%
- Pharmaceutical and biotechnology: 3.8%
- Durable goods manufacturing: 3.8%
- Accommodation and food services: 3.7%
These sectors are experiencing high demand and growth, as well as strong competition for talent, which may explain their higher salary increase budgets.
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Increases by Region
By region, the following provinces and territories reported the highest forecasted salary increases for 2024, excluding salary freezes.
- Quebec: 3.8%
- Ontario: 3.7%
- British Columbia: 3.7%
- Yukon: 3.7%
These regions are benefiting from a robust economic recovery and a favourable labour market, which may drive their higher salary increase budgets.
The implications and recommendations
The survey results suggest that Canadian employers are optimistic and confident about their salary increase plans for 2024, despite the potential risks and uncertainties in the economic and labour market environment.
They are also aware and responsive to the needs and preferences of their employees and are willing to invest in their compensation and benefits to attract, retain, and motivate them.
However, Canadian employers should also be cautious and prepared for the possible changes and challenges that may arise in the coming months and years, such as:
- The effect of the inflation rate and the cost of living, which may erode the value and the perception of the salary increases.
- The influence of the labour market conditions and the talent shortage, which may increase the pressure and the expectations for higher salary increases.
- The importance of the equity, diversity, and inclusion issues, which may require more action and accountability from employers to ensure fair and consistent pay practices.
To cope with these changes and challenges, Canadian employers should consider the following recommendations:
- Monitor and analyze the economic and labour market trends and indicators, and adjust their salary budgets and forecasts accordingly.
- Communicate and consult with their employees and stakeholders, and solicit their feedback and input on their compensation and benefits.
- Review and update their compensation and benefits policies and practices, and ensure they are aligned with the best practices and the legal requirements.
- Evaluate and measure the effectiveness and the value of their compensation and benefits programs and identify the areas for improvement and opportunity.
- Leverage the data and the insights from the salary surveys and the compensation experts and benchmark their compensation and benefits against the market and the industry.
Conclusion
By following these recommendations, Canadian employers can optimize their salary increase plans for 2024 and beyond and create a competitive and sustainable compensation strategy that supports their organizational goals and objectives, as well as their employee needs and preferences.