Canadian salaries projected to grow 3.64 per cent in 2024, a third consecutive year of significant increases
TELUS Health released its 41st annual Salary Projection Survey, revealing that the rising cost of salaries is being primarily driven by inflation and labour shortages which, in turn, are leading to recruitment and retention challenges for Canadian organizations. The Survey also found that base salaries continue to grow faster than historic norms, with an anticipated average increase of 3.64 per cent across Canada for 2024. This marks the third consecutive year of significant increases.
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“In 2024, salary increases are slated to exceed the average for the past 20 years due to external market pressures, including increased competition for skilled talent across the country. That competitive environment has added significant challenges when recruiting new employees and retaining top performers,” said Guylaine Béliveau, National Practice Leader, TELUS Health Compensation Consulting Practice. “As salaries rise, total rewards programs have gained prominence, with 33 per cent of companies enhancing benefits to help fight against inflation.”
The annual study encompasses data from more than 500 Canadian organizations spanning various industries and provides a compelling snapshot of compensation strategies in the midst of increasing economic uncertainty. Key findings include:
- Average actual increase of 4.22 per cent to base salaries in 2023, excluding freezes (4.02 per cent including freezes). This is higher than last year’s projections of 3.93 per cent excluding freezes (3.86 per cent including freezes).
- Approximately 4.4 per cent of organizations froze base salaries in 2023.
- Employers are projecting an average annual base salary increase of 3.64 per cent, excluding freezes for 2024 (3.56 per cent including freezes). This indicates very few organizations (1.6 per cent) plan to freeze their base salaries.
The impacts of inflation and labour shortages continue to push organizations in Canada to reexamine their compensation strategies. Additional findings include:
- Sixty-five per cent of organizations said a rise in compensation costs is a result of inflation and labour shortages.
- Fifty-seven per cent of organizations cited the need to adjust the salaries of current employees to be equitable with new hires.
- Forty per cent of organizations indicated increased challenges in controlling salary budgets.
- Twenty-nine per cent of organizations reported additional challenges in achieving financial objectives.
Opportunities to look beyond base salaries
In recent years, the rate of salary growth has generally surpassed inflation, slightly improving employees’ overall purchasing power. However, the correlation between these increases and inflation levels varies by industry and economic conditions. According to data from Statistics Canada, from February 2020 to June 2023, average salaries rose by 14.6 per cent, slightly outpacing a 14.4 per cent increase in consumer prices. Despite this gain, the March 2023 TELUS Financial Wellbeing Index found that 26 per cent of workers in Canada remain uncertain about their future financial comfort and believe various employer-provided financial supports would be valuable.
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“Amidst current economic challenges, an increasing number of workers are turning to their employers for aid in their financial, physical and mental wellbeing. Notably, previous TELUS Health data has shown that one in four workers would prefer better support for their wellbeing over a 10 per cent salary increase,” added Béliveau. “This underscores the significance, as well as the potential advantage, for companies to cultivate a supportive work environment during times of uncertainty. Employee Assistance Programs (EAPs) offer a wealth of mental health resources and support for employees and their families. Employers have the opportunity to bolster their workforce in various ways, ensuring their long term health and financial security.”
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