Canada's 2024 salary budgets fixed at 3.6%

Tech recalibrates amid stable raise forecasts for balance

Canada's 2024 salary budgets fixed at 3.6%

According to Normandin Beaudry, a firm specializing in actuarial and total rewards consulting, Canadian organizations are set to maintain their projected salary increase budget at 3.6 percent for 2024.

This figure aligns with initial forecasts made in the summer of 2023, as revealed by the results of a pulse survey launched in November 2023. The survey, which drew participation from over 430 Canadian organizations, aimed to assess how salary increase forecasts for 2024 have adjusted in recent months.

Despite 36 percent of these organizations reporting adjustments to their initial summer budget forecasts, with 44 percent increasing and 56 percent decreasing their initial 2024 salary budget, the overall average salary increase budget remains unchanged at 3.6 percent.

This stability comes after a period of growth observed from 2021 to 2023, marking a cautious approach amidst an environment of cost management and optimism. Darcy Clark, senior principal of compensation at Normandin Beaudry, notes that while forecasts are less aggressive than the previous year, they continue to exceed historical norms and current inflation rates, indicating a balanced approach to compensation spending.

The survey further identifies that the technology sector primarily accounts for organizations reducing their initial salary budgets. These adjustments reflect past significant compensation increases, cost-saving measures, and reduced talent market pressures.

Conversely, companies in niche industries, facing competitive market forces and inflation, are more likely to increase their initial salary budgets as a strategy for retaining key talent.

Moreover, 41 percent of surveyed organizations plan to allocate an average additional budget of 0.9 percent in 2024, aiming for greater flexibility in addressing compensation challenges. This additional budget is intended for ad-hoc salary adjustments to tackle internal inequalities, differentiate salary increases for top performers and critical roles, and support retention strategies.

The average total budget in Canada for 2024 is set at 4.0 percent, consistent with earlier predictions, with variations across different ownership structures. Not-for-profit organizations lead with a forecast of 4.3 percent, followed by privately held and publicly traded organizations at 4.2 percent and 4.0 percent respectively, and public and parapublic organizations at 3.8 percent.

As salary increase budgets stabilize, Canadian organizations are urged to optimize their total rewards strategies.

With 67 percent of participating companies prioritizing the competitiveness of their total rewards programs for 2024, the focus extends beyond cash compensation. Enhancing benefits, pension plans, and non-monetary components are essential for distinguishing organizations in the talent marketplace.