Canadian employers are anticipating the highest salary increase in two decades as they try to balance inflationary pressures, surging interest rates, recession risks and a tight labour market, a new survey has found.
According to the report by consulting firm Eckler Ltd., the national average base salary increase for 2023 is projected at 4.2%, excluding planned salary freezes, which parallels 2022 actual base salary increases. Projected salary increases for 2022 was lower than the actual figures.
British Columbia, Ontario and Quebec are projecting the highest average salary increases, with the Yukon, Nunavut and Prince Edward Island projecting the lowest.
The largest average salary increases are expected to be in the technology sector at 5.4%. The smallest increases are expected in the education, health care, agriculture and hospitality sectors.
Eckler’s national compensation practice leader Anand Parsan said salary planning for 2023 has been rife with complexity.
The survey results also show that Canadian organizations are planning to use compensation as a key part of their talent management strategy, with just 1% of organizations reporting a planned salary freeze for 2023. Additionally, 44% of organizations remain undecided about salary budgets for 2023.
Meanwhile, new research from talent solutions and business consulting firm Robert Half found that salary remains top of mind for Canadian workers, with 57% of professionals saying they feel underpaid. Other highlights from the report include:
- 34% of workers plan to ask for a raise by the end of 2022 if they don’t get one or the amount is lower than expected
- 37% of workers would consider changing jobs for a 10% increase in pay
- 47% of professionals are more likely to request a higher starting salary today compared to 12 months ago
- Employers are stepping up in order to win over talent, with 42% offering higher starting salaries.
- 79% of managers who increased base compensation for new hires in the past year have also made pay adjustments for current staff.
Elizabeth English, a principal at Mercer Canada, pointed out that while compensation budgets were much higher than in recent years, planned increases will still fall short of year-over-year inflation, which reached a 40-year high of 8.1% in June. “Historically, companies have often relied on the competition for talent, not inflation, in shaping their compensation strategies. But because of inflation, we found that 34% of businesses are considering ad-hoc, off-cycle wage reviews to combat turnover, compared to 19% in March, 2022, in our last survey,” she said.