Despite the possibility of a recession, Canadian workers are projected to see an average salary increase of 3.6 percent in 2024, as revealed in Normandin Beaudry’s recent survey on annual salary adjustments. The Canadian financial consulting firm published these findings on Tuesday.
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Canadian workers pay increase 2024
From a survey of over 700 companies, it was discovered that, on average, employers are planning to raise Canadian workers pay by 3.6 percent in 2024. This increase doesn’t include situations where salaries won’t change at all.
Interestingly, only two percent of companies are planning to freeze salaries for the upcoming year. This is a significant drop compared to before the pandemic when salary freezes were more common, averaging around three to five percent of companies. The consulting firm pointed out this noteworthy decrease.
According to the survey, 43 percent of respondents stated their intention to allocate an extra budget for salaries, averaging around one percent.
List of sectors projected with higher-than-average salary budget increases in 2024
These are the sectors projected with higher than average salary budget increases in 2024 for Canada:
- Professional, scientific and technical services: 3.9%
- Real estate, rental and leasing: 3.9%
- High technology: 3.9%
- Pharmaceutical and biotechnology: 3.8%
- Durable goods manufacturing: 3.8%
- Accommodation and food services: 3.7%
Provinces projected to have Salary increase above national average in 2024
In 2024, several provinces and territories are anticipated to have salary increases that match or surpass the national average. The provinces projected to have salary increase above the national average of 3.6% in 2024 are:
- Quebec: The highest projected salary increase in all of Canada in 2024, at 3.7%
- Alberta: The second highest projected salary increase in Canada in 2024, at 3.65%
- Nova Scotia: The third highest projected salary increase in Canada in 2024, at 3.64%
These projections may vary depending on the economic and labour market conditions, as well as the sector and industry of employment.
On the other hand, the remaining provinces and territories are likely to experience slightly lower-than-national-average wage growth. Workers in the Northwest Territories, Saskatchewan, and Prince Edward Island are forecasted to receive average salary increases of 3.3 percent.
Are Salary Freezes on the Horizon for Canadian Workers in 2024?
For those concerned about their salaries staying the same next year, Normandin Beaudry has some reassuring news. They found that only 2% of companies are thinking about doing that.
The report suggests that these unusually low numbers are probably because there is a shortage of workers, and prices for things are going up fast. Typically, when salaries get frozen, it’s more in the range of 3% to 5%.
For most Canadians dealing with the high cost of living, getting a raise is likely their top priority.
Challenges that could impact Canadian employee pay raise in 2024
Some of the challenges that could impact Canadian employee salary raise in 2024 are:
- Economic uncertainty: The global economy’s recovery from the COVID-19 pandemic, coupled with concerns about potential recession, rising interest rates, inflation, and trade tensions, may impact businesses’ profitability and sustainability, limiting their ability to offer competitive employee compensation.
- Labour market tightness: Canada still faces labor shortages in certain sectors and regions, such as professional services, IT, computer design, IT security, and AI, despite increased immigration and vaccination rates. This creates challenges for employers in talent attraction, retention, and managing wage expectations, as workers have more bargaining power.
- Pay equity and transparency: Organizations are reviewing pay practices to ensure compliance with pay equity legislation and alignment with compensation philosophies. This may involve market adjustments, addressing internal equity issues, and accelerating lower-end employee progression. Employees are also seeking transparency in how their pay is determined and compared to peers.
- Performance differentiation: Employers must balance rewards for high performers and strategic employees while maintaining equity in team and individual performance. This may include off-cycle salary increases, variable pay, or non-monetary rewards, necessitating clear and consistent performance management systems.
Economic challenges that could impact Canadian organization in 2024
- Economic uncertainty: The global economy’s ongoing recovery from the COVID-19 pandemic, along with concerns about potential recession, rising interest rates, inflation, and trade tensions, may impact businesses’ profitability and sustainability. This could limit their ability to offer competitive and equitable compensation to their employees.
- Labour market tightness: Despite increased immigration and vaccination rates, Canada still faces labor shortages in specific sectors and regions, particularly in professional, scientific, and technical services, IT consulting services, computer design, IT security, and AI. This poses challenges for employers in terms of talent attraction and retention, as well as managing wage expectations, given workers’ increased bargaining power.
- Public debt: Government support measures for individuals and businesses during the pandemic led to a significant increase in public debt. This may restrict fiscal flexibility for future expenditures and investments, making public finances more vulnerable to interest rate fluctuations.
- Inflation: Inflation has exceeded expectations in Canada, reaching 4.1% in August 2023. This can erode the purchasing power of consumers and workers, potentially prompting the Bank of Canada to implement monetary policy tightening sooner or more aggressively. Higher borrowing costs may weigh on economic activity and housing demand.
- Housing: Canada’s housing market experienced a surge during the pandemic due to factors like low interest rates, limited supply, and changing preferences. However, this has raised concerns about affordability, particularly for first-time homebuyers and renters. A correction in the housing market could negatively affect consumer confidence, wealth, and spending.
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Frequently Asked Questions (FAQs) -Canadian pay increase 2024
1. Are Canadian workers expecting salary increases in 2024?
- Yes, despite concerns about economic uncertainty, a recent survey by Normandin Beaudry predicts that Canadian workers are likely to see an average salary increase of 3.6 percent in 2024.
2. How does this projection compare to previous years?
- It’s a notable increase considering that in the past, salary freezes were more common, ranging from 3% to 5%. In 2024, only a small 2% of companies plan to implement salary freezes.
3. Which sectors are expected to have higher-than-average salary increases in 2024?
- Several sectors are projected to have above-average salary increases in 2024, including professional, scientific, and technical services; real estate, rental, and leasing; high technology; pharmaceutical and biotechnology; durable goods manufacturing; and accommodation and food services.
4. What are the challenges that might affect Canadian employee pay raises in 2024?
- Economic uncertainty stemming from the COVID-19 pandemic’s aftermath, labor market tightness, pay equity, transparency, and performance differentiation are challenges that could impact Canadian employee salary raises.
5. How might economic challenges affect Canadian organizations in 2024?
- Economic challenges include ongoing global economic recovery, labor market tightness, high public debt, inflation, and the booming housing market. These factors may impact the profitability, sustainability, and financial flexibility of Canadian organizations.
6. What can Canadian workers and organizations do to navigate these challenges effectively?
- Canadian workers should stay informed about salary trends, while organizations can focus on talent attraction, pay equity, and performance differentiation to remain competitive in these uncertain times. Additionally, monitoring economic indicators and housing market trends can help organizations adapt to changing circumstances.
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