ESTIMATED 3.8% INCREASE FOR 2023
MONTREAL, Sept. 8, 2022 /CNW/ - Normandin Beaudry, a leader in actuarial consulting services and total rewards, has just released the results of its 12th annual Salary Increase Survey. This 2023 edition, conducted over the summer by the company's compensation specialists, polled more than 750 companies and nearly 1.8 million employees across Canada. The results show that, for a second consecutive year, organizations are planning average salary increase budgets of 3.8% (excluding salary freezes) in 2023, a rate higher than historical trends. This projection may seem conservative. However, it is worth noting that more than one out of ten organizations are planning average salary increase budgets above 5% and in some cases as high as 20%.
"The overall results of this recent survey comes as no surprise given the current economic environment and the ultra-competitive labour market," said Darcy Clark, Principal, Compensation, at Normandin Beaudry. "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."
Nearly half of Canadian organizations allocated an additional budget of 1.9% on average in 2022, higher than the initial forecast of 1.2%. For 2023, projections reveal that one third of organizations plan to grant an additional budget of 1.4% on average. 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.
Only 1% of the organizations have implemented a salary freeze in 2022 or intend to in 2023, a particularly low number, which can be attributed to the current context, but contrasts with the rates observed in recent years. Uncertainty related to the pandemic had pushed the number of organizations that have implemented a salary freeze in 2021 to 8%, when it was typically between 3% and 5% before the pandemic.
Competition to attract and retain talent in the IT sector was already quite prevalent before the pandemic. This has been exacerbated over the past two years with the growing popularity of remote work and the precipitated digital transformation many organizations have adopted. As a result, companies across Canada in the IT-related sector are planning on increasing average salaries by 4.2% to 5.8%, excluding salary freezes, for 2023.
Small organizations, in terms of number of employees, plan on offering higher salary increases than their larger counterparts in 2023. In Canada, organizations with fewer than 50 employees lead the pack with an average projected budget of 4.5%, followed by companies with 50 to 99 employees (4.1%) and those with 100 to 199 employees (4.0%), excluding salary freezes.
Once again, organizations are expected to be more generous than in previous years. Despite record-high budgets, it is important to remain cautious as a recession could occur in the coming months due to the uncertain economic times, characterized by high inflation combined with low unemployment rates.
An increase in direct compensation can help organizations position themselves in the war for talent. However, according to the experts at Normandin Beaudry, addressing labour shortage should include measures that do not exclusively involve an increase in fixed costs, such as pay raises. Rather a compensation strategy that offers a combination of monetary and non-monetary components can go a long way in helping organizations stand out from the pack.
The interactive tool, with details by province, industry sector, type of organization and company size, amongst others, can be found here.
Founded in 1992, Normandin Beaudry is a leader in actuarial consulting services and total rewards. From its offices in Montreal, Toronto and Quebec City, nearly 300 employees serve clients across Canada in eight areas of expertise: Pension and Savings, Pension Plan Administration, Investment Consulting, Group Benefits, Compensation, Health, Performance, and Communication.
Normandin Beaudry's team of close to 40 compensation consultants is the largest in Canada. Through the sound and innovative use of data and technology, our versatile and creative experts provide their clients with unique and simple solutions that address their strategic and operational needs. For more information, visit: https://www.normandin-beaudry.ca/en/areas-of-expertise/compensation/
SOURCE Normandin Beaudry
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