2023 salary increases

2023 salary increases, a 9-year high

Over the last few months, more than 350 organizations took part in the 9th edition of the PCI Compensation Consulting (PCI) salary forecast survey.

Although the economic environment is uncertain, record inflation means that salary projections are at their highest since we launched our salary increase survey 9 years ago. This is clearly a reflection of the new reality organizations are up against: a competitive labour market, due in part to an aging population, as well as inflationary pressures that are only beginning to ease. 

Salary adjustments for non-unionized employees 

The actual salary increase budgets for 2022 were 4.5 %, on average, in Québec and 4.2 % in the rest of Canada. Salary increase budget forecasted for 2023 are similar, on average: 4.2 % in Québec and 4.1 % in the rest of Canada. The average salary increase budgets are shown in the table below:
 

Some observations:

• The larger the organization, the lower their 2022 increases and the 2023 projected increases
• At 3.2%, the projected rate of wage increases in the culture and leisure/accommodation and restaurant sector is the lowest 

Additional salary increase budget

53% of the organizations surveyed have an additional budget for rewarding non-unionized employees in particular cases (employees with high potential, fast-tracked employees, employees in jobs with a shortage of workers, etc.). The additional budget for these organizations averaged 2.5% in 2022 (actual) and will remain unchanged in 2023 (projected).Salary structure

In 2022, 7% of organizations in Québec froze their salary structure, and in 2023, only 2% of organizations expect to do so. Average salary structure adjustment budgets (excluding freezes) are 3.3% in Québec and 2.9% in the rest of Canada.

Inflation

The majority (90%) of the organizations surveyed said that they have implemented at least one new measure to deal with inflation. The most common measures include:

• 64% of organizations have implemented or kept a telecommuting policy. Telecommuting reduces work-related employee expenses.
• 47% of organizations increased their projected salary increase budgets and 34% increased their salary structure more than initially anticipated.

Additionally, one in five respondents upgraded their vacation policy.

Lastly, 61% of organizations said these new measures were adopted universally.

Salary growth

The majority (68%) of organizations surveyed by PCI indicated that they have accelerated employee salary progressions in recent years.The most frequently cited factors behind this faster growth are:

• Market competitiveness (87% of organizations)
• Retention (83% of organizations)

Recruitment strategies

A majority (69%) of organizations surveyed also said that they have adopted new recruitment strategies to counter labour market pressures. The following strategies were observed most often:

• 91% said they regularly or sometimes made compromises on experience or qualifications during the recruitment process
• 88% provided more internal training on a regular or occasional basis 
• 56% said they are relying on outsourcing more

Internal equity

Our survey included a series of questions on internal equity issues. We wanted to assess the extent to which organizations focus on the perception of equity and justice during the recruitment process considering the current labour shortage.

• 44% of organizations said that internal equity issues arise frequently or very frequently when hiring employees
• 95% said that they take into account current employee salaries in the hiring process
• However, only 12% said they frequently or very frequently adjust salary of current employees after hiring new ones and 54% say that they do so occasionally