What are Canadian employers planning?
Salaries are beginning to balance out and come in line with pre-pandemic norms. Increases this year are planned to be in line, but slightly lower than those of 2024, according to new research from Normandin Beaudry.
Being proactive in managing salaries will be important this year, given the uncertain economic climate and continual raising inflation rate, which is projected to be 2.00 percent in 2025 and 2.50 percent in 2026. The labour market is continuing to favour employers.
Many organizations across Canada are therefore planning carefully. Average salary increase forecasts in Canada softened marginally compared to last year, but remain higher than normal with an average forecasted increase of 3.5% for 2025 excluding salary freezes.
Actual increases in 2024 were aligned with predictions for that same period at 3.6%.
The Normandin Beaudry study — which heard from more than 750 organizations across Canada — found that professional, scientific and technical services sectors are forecasting increases in 2025 at 3.7%, the highest sectors in the study, but down from 4.7% in 2024. All organizations of all ownership types however are under pressure. Minor variances across all company ownership types were observed for 2025 increase forecasts:
· Private sector (not listed on the stock market): 3.5%
· Not-for-profit organizations: 3.4%
· Private sector (listed on the stock market): 3.4%
· Public and parapublic sectors: 3.3%
Please see the Normandin Beaudry study for additional details and more tables including those for planned additional budgets and total budgets.
WHAT ACTIONS SHOULD EMPLOYERS TAKE?
Employers should review the competitiveness of their salaries each year in relation to their local and regional marketplace, their sector, and what is happening in the general economy.
In North America, the labour market is still in favour of employees; however employers are slowly regaining the upper hand when it comes to salary negotiations, according to another survey from the Financial Post.
What turnover is your business experiencing? Are employees asking or suggesting that rates of pay should be reviewed? Are potential new hires not accepting or are negotiating offers?
These are all signs that your market competitiveness may not be aligned, or that employees are expecting the organization to adjust their paycheck.
In the end it will come down to what the business can afford, both financially and in keeping and attracting talent. Having insight and data however will go a long way to support decision-making that is right for both the organization and it's employees.
Our team at TAP Strategy & HR Consulting are experts in this area and can help you navigate these decisions. TAP has access to benchmark market data for all regions across Canada and can help make the best use of your compensation budgets. Give us a call at 613-222-2499.
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Bruce Weippert is the co-founder and president of TAP Strategy & HR Consulting, a boutique-style management consulting firm specializing in strategy, HR services and Helping Businesses Succeed.
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