Employers continue to adapt to market pressures post pandemic
This 2023, organizations across Canada are planning average salary increase budgets of 3.8%, excluding salary freezes, according to a new report - as employers aim to address the problem of retention in the workplace.
Research from Normandin Beaudry said this planned average salary increase budget is a "rate higher than historical trends." It also found that more than one in ten organizations are planning average salary increase budgets above five percent, while some are going as high as 20%.
Darcy Clark, Principal, Compensation, at Normandin Beaudry, said the results of their research did not come as a surprise considering the "economic environment and competitive labour market."
"Employers continue to adapt to market pressures as evidenced by the results of our survey: the average salary increases granted in 2022 in Canada have reached 3.8%, exceeding the initial projection of 3.4% and 2.8%, published in February 2022 and July 2021 respectively," added Clark.
According to the research, proactively planning for additional budgets could help employers in retaining employees, differentiating rewards for high performers, and accelerating the progression employees in the lower end of their pay range.
And for nearly half of Canadian companies, the report found they’ve allocated an additional budget of 1.9% on average. By size, smaller organizations with less than 50 employees are considering an average projected budget of 4.5%, according to the report, followed by organisations with 50 to 99 employees with 4.1%, and then companies with 100 to 199 workers with 4.0%.
From these findings, the report said small organizations plan to offer higher salary increases than their larger counterparts in the coming year. Employers are warned, however, to be cautious as "recession could occur in the coming months because of uncertain economic times."
Read more: Be careful with wage rises – BoC deputy
In terms of salary freezes, only one per cent of organisations are planning to implement a salary freeze, said the report, similar to the number of organizations that carried it out in 2022. Previously, eight percent of companies implemented a salary free in 2021 due to the pandemic, while pre-pandemic data revealed that salary freezes were implemented by three to five percent of companies.
Normandin Beaudry's 12th annual Salary Increase Survey sought the responses of more than 750 companies and nearly 1.8 million employees across Canada.