2024 Salary Increases: Canadian Organizations Maintain Their Budget

Normandin Beaudry, a leader in actuarial and total rewards consulting services, released the results of its pulse survey on salary increase projections. Launched in November 2023, the pulse survey was conducted by the firm’s compensation experts to evaluate how initial 2024 salary forecasts, which were determined in the summer, have evolved over the last several months. More than 430 Canadian organizations participated in the survey over its month-long run.

HIGHLIGHTS
Revised budgets indicate that salary increases remain aligned to initial forecasts

Results of the pulse survey reveal that 36% of participating organizations reported changes to their initial budget forecasts made over the summer months, with 44% increasing their budget, and the remaining 56% decreasing their initial 2024 salary budget.

Overall, the average Canadian salary increase budget forecast for 2024 remains steady at 3.6%, the same as the summer forecast. However, on a year-over-year basis, the survey shows that the average salary increase budget is expected to decline, after the upward trajectory observed between 2021 and 2023. Darcy Clark, Senior Principal, Compensation, at Normandin Beaudry, explains this phenomenon: “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.”

What type of companies are making changes to their budget forecasts?

Organizations that reported decreases to their initial salary budget were primarily from the technology sector.¹ The more conservative increase budget forecasts from the survey may be linked to substantial increases to compensation programs already implemented over the last several cycles, which reported high salary increase budgets over the past years, cost reduction efforts, and the decrease of pressure for talent in the market. Organizations that reported a rise in their initial salary increase budget were primarily from niche industries.² These increases can be linked to the competitive nature of the market, inflation, and as a strategy to retain key talent.

Additional budget for more flexibility
In addition to a salary increase budget, 41% of participating organizations plan to set aside an average additional budget of 0.9% in 2024. “Organizations that are setting aside additional budgets are positioning themselves to be better equipped in responding to challenges throughout the next compensation cycle,” explains Clark. “This provides organizations with an opportunity to address internal inequalities more thoroughly with ad-hoc salary adjustments. Additionally, reserving even this small percentage of their budget ensures sufficient differentiation in salary increases are possible to deliver for high-performing and high-potential employees and supports retention efforts for highly strategic or mission-critical roles.”

Stable total budgets
In Canada, the average total budget remains at 4.0% for 2024, aligning with initial forecasts from the summer, excluding freezes.³ Average total budget forecasts by ownership structure include:

• Not-for-profit organizations: 4.3%
• Privately held organizations (not listed on the stock market): 4.2%
• Publicly traded organizations (listed on the stock market): 4.0%
• Public and parapublic organizations: 3.8%

Total rewards, an integral part of the solution
With the pace of heightened salary increase budgets over the last few years appearing to settle, organizations must continue to strategize on how to effectively allocate their budgets across their workforce and maintain the overall competitiveness of their broader total rewards offering. Recognizing that increases to cash compensation is not the only effective way to compete for talent, 67% of participating organizations noted that a strategic priority for 2024 involves ensuring the competitiveness of their total rewards programs. Enhancing benefit and pension plans as well as non-monetary components for example, can help differentiate organizations from competitors.

The full report and interactive tool, with details by province, industry sector, size and type of organization, are available on the Normandin Beaudry website.

About Normandin Beaudry
Founded in 1992, Normandin Beaudry is a leader in actuarial and total rewards consulting services. From its offices in Montreal, Toronto, and Quebec City, close to 350 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. In 2023, Normandin Beaudry expanded its consulting reach with a new global joint venture, joining MBWL International as an equal and independent partner.

About our compensation expertise
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/.