Update on 2022 salary forecasts: a marked increase in budgets
With inflation on the rise, along with persisting labour shortages and high turnover, we thought it would be worthwhile to check in with the organizations we surveyed for 2022 and see whether the forecasts they reported are still on track.
We sent out a survey in January 2022. The resulting update provides a snapshot of how 121 Quebec organizations are planning to budget for salary increases and structural adjustments, plus the differentiation strategies they are or will be using in the short term.
1. Salary increases: Tech and finance come out on top
While 3% of the organizations in our survey plan to freeze employee salaries, the average budget for salary increases (excluding salary freezes) is 3.3% in Quebec and 3.2% in the rest of Canada. This is a significant jump from the numbers forecasted in September.
Businesses in the finance and tech services sectors have seen the greatest increases, as shown in the table below.
We also reported in September that 52% of the organizations we surveyed had an additional budget to recognize special cases (high potential employees, fast tracked employees, employees in jobs with labour shortages, etc.). That figure is now 64%.
2. Salary structure – A sharp drop in freezes
While 16% of the organizations surveyed in September opted to freeze their salary structure in 2021 and 6% planned to do so in 2022, only 2% of those in our January survey say they would do so now. This downward shift is unsurprising given that ever pressing recruitment and retention challenges are forcing employers to tread very carefully.
As we mentioned in a previous article, indexing salary structures is not a very investment-heavy process for organizations, and is vital to keeping their structure competitive, especially during times of inflation.
The table below shows the difference in average structural adjustment budgets (excluding salary structure freezes) between our September 2021 survey and our recent update:
3. Trends in budgeting and differentiation
66% of the organizations surveyed report that their salary increase budget for 2022 is higher than they initially anticipated in the summer of 2021, due to recruitment, retention or internal equity issues, inflationary pressures, and so on. The same proportion of organizations even indicated that this year’s budget was in fact the highest in the last seven years.
Our flash survey also asked about organizations’ ongoing or planned strategies to set themselves apart from the competition in the race for talent. The most popular are mental health and wellness initiatives, remote work arrangements and greater managerial involvement in the compensation process.
This 2022 update on the September 2021 edition of PCI’s annual salary forecast survey found that organizations have revised their forecasts upwards. Labour shortages, inflation and high turnover in many sectors are the main factors behind changes in salary increase budgets.
PCI Compensation Consulting is recognized for conducting tailor-made surveys on a regular basis to help its clients stay abreast of significant trends in total compensation. By continuously updating our databases, we are in a better position to provide our clients with a clear picture of the compensation offered in their respective competitive landscape.
If you would like to discuss the results of this survey, contact:
Evelyne Gaudreau, Consultant
514-788-4747, ext. 227
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