Upward pressures on wages remain strong, oscillating between inflationary catch-up, employee retention and record vacancies to be filled. Very few signals are yet emerging of the impact that the recession will have in a context of labor shortages.
The 40e LifeWorks’ annual survey of salary projections for non-union employees shows an anticipated average base salary increase of 3.93% (excluding salary freezes) next year across Canada. For 2022, the initial projections were for an average increase of 2.67%, but tensions in the labor market combined with the rise in the cost of living explain that the real increase was 4.01%.
Manitoba (4.75%), Nova Scotia (4.22%) and Quebec (4.16%) are the three provinces with the largest average base salary increases expected for 2023, says the human resources consulting firm.
By way of comparison, this annual increase in base salary has remained around 2.6% from 2018 to 2021 across Canada.
Virtual absence of salary freezes
Interestingly, the year 2023 should be marked by a virtual absence of salary freezes. An almost unprecedented fact. Thus, barely 1.5% of the organizations surveyed indicate that they plan to freeze salaries, while 12% remain undecided. This year, 5.7% of organizations took the pay freeze route, up from 12% in 2021, 36% at the height of the pandemic in 2020, and 4% in 2019.
In its presentation, LifeWorks adds that 91.9% of Quebec employers who participated in its survey said no to a wage freeze in 2023.
Inflation and the shortage of labor thus maintain their pressure on employers. In fact, 65% of organizations indicate an increase in compensation costs resulting from market pressure. And 58% cite the need to adjust the salaries of current employees to be fair with those of new employees.
Prior to LifeWorks, the Order of Chartered Human Resources Advisors also released its projections for Quebec employers. Average wage increases of 4.1% were anticipated next year, slightly higher than forecasts for Canada as a whole. “The average increase expected in Quebec is the highest recorded since at least 2008,” the Order points out. These forecasts are also in line with the salary increases actually granted in 2022. According to the latest flash polls from the consulting firms participating in the survey, the average increase in budgets varied between 3.7 and 4.5% . »
Labor and cost of living
The scarcity of labor weighs heavily. To such an extent that additional budgets aimed at competitive hiring and retention of key or high-performing employees remain very high in corporate salary policy.
In addition, the soaring cost of living has become the main cause of financial stress for employees.
The National Payroll Institute said Tuesday that with interest rates and inflation rising, offices now reopened and spending on the rise, the wealth effect generated by the pandemic is rapidly dissipating. The Institute’s annual survey, supplemented by analysis from Canada’s Financial Wellness Lab, “finds that the number of people living paycheck to paycheck has increased by 26% over the last year “. Admittedly, lower-income households are dominant in the group claiming to be in financial difficulty, but “there is still a significant proportion (41%) of those in the financially difficult group declaring an annual household income greater than $100,000” , adds the institute.
All these wage issues are now to be put in the perspective of a dialectic recession-shortage of record labor.
Moreover, Statistics Canada also pointed out in June that the strongest wage gains were observed among non-unionized jobs—nearly double with unionized employees—while recalling that “although union coverage can increase the ability employees to negotiate higher wage increases, such increases may be delayed until the expiry of collective agreements and the start of a new round of collective bargaining”.
According to an extrapolation made from data from the Quebec Ministry of Labor, more than a third of registered collective agreements will expire in 2022 and 2023.