Canadians might not be getting the raise they expected at work next year

Canadians might not be getting the pay raise they expected at work next year

Canadian workers might be in for a surprise in 2024, according to a new budget report looking into pay raises next year.

As employers across the country continue to adapt to a post-COVID-19 workforce, a recent survey by Mercer has revealed a shift in compensation trends that could have a big impact on the financial landscape in the coming year.

According to the report, when asked about their 2024 funding, organizations across Canada are projecting a decrease in the size of annual increase budgets compared to 2023.

While concerns about the rising cost of living continue to trouble many Canadians, employers are projecting “more modest” annual increases in both merit and total compensation budgets compared to the previous year.

Specifically, employers anticipate allocating 3.3% for merit increases and 3.7% for total increase budgets, down from 3.6% and 4.1% in 2023.

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Although Canada still has an extremely tight labour market, indicators show that the market is stabilizing. As a result, the use of pay increases to respond to labour market pressures has slowed down.

“In the face of economic uncertainty and reduced labour market pressure, employer compensation budgets seem to be returning to pre-pandemic levels,” said Elizabeth English, Principal in Mercer Canada’s Career Products business. “If Canada’s labour market continues to cool over the next few months, it could reduce pressure on 2024 compensation budgets even further.”

The survey also highlights how pay transparency is an “emerging priority” for Canadian employers. British Columbia has become one of the first provinces to have passed pay transparency legislation, which requires employers to post salary ranges on publicly advertised job postings. The legislation will go into effect on November 1, 2023.

Whereas the projected merit and total increase in budgets for 2024 are both down compared to 2023, it’s important to note that 85% of survey respondents indicated that they are only in the “preliminary phases of budgeting.”

CNW Group/Mercer

CNW Group/Mercer

Over the last few months of 2023, Canadian organizations will start to develop their annual increase and promotional budgets as well as make plans around things like salary structure adjustments.

The results of surveys like this are inputs that compensation professionals use to develop their budget recommendations, even though the results only represent preliminary numbers.

Mercer advises employees to “gather as much market data as you can about businesses that have a similar talent pool” to get a good understanding of trends in their industry and the regions in which they do business.

“Take that information and marry it up with your unique talent and total rewards philosophy, along with your business and financial outlook,” says the consulting firm. “When you have the full picture, you can put together a recommendation that is more likely to complement your efforts toward rewarding, retaining, and motivating your employee population.”