Employers feel the squeeze as wages climb
Almost half of Canadian companies have changed their projected salary increases for the coming year.
Results of a newly released survey show that 48 percent of organizations in Canada increased their budgeted salary increases for 2023 from 3.8 percent leading up to last summer to 4.2 percent in fall 2022, excluding wage freezes. The average budget also outpaced historical twenty-year trends, according to the survey conducted by Normandin Beaudry.
It was conducted last November and more than 440 Canadian organizations responded in less than one month. The firm’s compensation experts developed the survey to monitor initial 2023 salary forecasts established last summer given the unique economic landscape and difficult job market conditions.
“Despite volatile economic conditions, organizations are continuing to invest in their pay raise budgets to adapt to an extremely competitive job market,” said Darcy Clark, senior principal, compensation, at Normandin Beaudry.
- Private sector (not listed on the stock market): 5.0 percent
- Not-for-profit organizations: 4.8 percent
- Private sector (listed on the stock market): 4.3 percent
- Public and parapublic sectors: 4.0 percent
Organizations in the professional, scientific, and technical services sector stand out in Canada with a revised salary increase budget of 4.7 percent for 2023 as compared to the initial forecast of 4.0 percent. IT consulting services, computer design, IT security, and AI sectors are on an equal footing, with a revised salary increase budget of 4.7 percent.
The services sector relies on the quality of its work force, which most likely explains the higher than anticipated revisions in a context where the war for talent is fierce.
An increase in cash compensation can help companies compete in the war for talent. However, there are many effective measures that do not necessarily involve an increase in fixed payroll costs. According to Normandin Beaudry’s experts, a compensation strategy that offers a mix of monetary and non-monetary components can go a long way in helping organizations differentiate from competitors.