New surveys show average salary increases forecast for workers in 2024

Canadian workers are forecast to receive an average salary increase of 3.6 per cent in 2024, with most organizations planning to maintain their initial salary increase budget from last summer, according to Normandin Beaudry’s pulse survey on salary increase projections.

The survey sought to confirm the 2024 salary forecasts established by the organization’s annual salary increase survey last summer. Since the release of the September survey, only 36 per cent of participants reported changes to their initial budget.

For organizations planning changes to their initial budget, 56 per cent intend to lower their salary increase budget, while 44 per cent intend to increase their initial budget.

These findings are in line with Mercer’s QuickPulse Canada compensation planning survey, which also forecasted a total budget increase of 3.6 per cent for 2024.

However, the Normandin Beaudry survey also shows that on a year-over-year basis, the average salary increase budget is expected to decline, following the upward trajectory observed between 2021 and 2023.

“Companies are trying to find the right balance between managing their compensation spend and remaining cautiously optimistic. While less bullish than last year, it’s important to note that forecasts for 2024 remain above historical norms, and greater than current rates of inflation,” said Darcy Clark, senior principal, compensation, at Normandin Beaudry.

In addition to the traditional salary increase budget, 41 per cent of Canadian respondents reported setting aside an average of 0.9 per cent of payroll for additional budget funds. The primary intents of these additional budgets are to:

• Implement ad hoc market adjustments: 69 per cent.
• Differentiate compensation for high performers: 52 per cent.
• Retain strategic or mission-critical employees: 50 per cent.

This differs slightly from the September survey, which found that 43% of Canadian organizations planned to grant an average additional budget of 1.0% for the coming year.

Salary increase budget by province

While it appears that annual salary increase budgets are beginning to stabilize, 2024 forecasts remain above historical trends and current rates of inflation, according to Normandin Beaudry. The difference between the initial summer budget (2023) and the revised fall budget (2023) by province are as follows:

Over the past few years, the pace of heightened salary increase budgets has appeared to settle, and organizations must continue to strategize how to effectively allocate budgets across their workforce and maintain the overall competitiveness of their broader total rewards offering, according to Normandin Beaudry.

67 per cent of participating organizations noted that a priority for 2024 is ensuring the competitiveness of their total rewards programs, as enhancing benefit and pension plans as well as non-monetary components, for example, can help differentiate organizations from competitors.