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Employers digging deeper on wage increases than first planned, average budget now 4.7 per cent: Survey

Wage budgets at Canadian employers continue to be fluid and are facing upward pressure, according to new data released by Normandin Beaudry.

The actuarial consulting and total rewards company looked at 400 organizations, and found that nearly half (48 per cent) have changed their projected salary increases for the coming year.

In Canada, the average budget was higher than initial forecasts and historical 20-year trends, increasing from 3.8 per cent leading last summer to 4.2 per cent in fall 2022, excluding wage freezes.

“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.

Additional budgets for more flexibility

In addition to the salary increase budget, 43 per cent of participating organizations plan to set aside an average additional budget of 1.4 per cent in 2023.

“Proactive organizations that plan for an additional budget will benefit from greater agility over the year. This can be used to do things like make salary adjustments in line with the market, retain employees in strategic roles and adjust compensation for high performers,” it said in a press release.

Record-high total budgets

In Canada, average total budgets — salary increase and the additional budget — are now at 4.7 per cent for 2023 as compared to the initial forecast of 4.3 per cent, excluding freezes. Quebec continues to lead the pack with average total budgets of 5.1 per cent. Variations were observed across the country based on the type of organization:

• Private sector (not listed on the stock market): 5.0%
• Not-for-profit organizations: 4.8%
• Private sector (listed on the stock market): 4.3%
• Public and parapublic sectors: 4.0%

The services sector leads the way

Organizations in the professional, scientific, and technical services sector stand out in Canada with a revised salary increase budget of 4.7 per cent for 2023 as compared to the initial forecasted 4.0 per cent.

IT consulting services, computer design, IT security, and AI sectors are on an equal footing, with a revised salary increase budget of 4.7 per cent.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.