2024 Salary Forecasts and Strategies for Employers: Navigating the Changing Landscape

2023-09-22 23:06:34

“Yes there is a stabilization, but over the year as a whole, the labor shortage tends to decrease, which should remove pressure on wages,” indicates economist Pierre Emmanuel Paradis. (Photo:123RF)

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WAKE-UP-MORNING. 2024 could well mark the end of salary increases which are close to 4%, because companies will not experience sufficient growth in their turnover to maintain them at such levels. And that worries employers.

This is one of the conclusions that we draw following the unveiling of the 2024 salary forecasts by the Order of approved human resources advisors (CRHA). The organization aggregated data from surveys conducted by CGC-Talent, Gallagher, Mercer, Saucier Conseil, Telus Santé, WTW and Normandin Beaudry.

The latter’s partner and head of remuneration practice, Anna Potvin, was surprised that the salary increase announced by their annual study would reach 3.8% in 2024. “Before 2019, we did not see these increases by more than 3%, while the economic context was quite more favorable,” she recalls.

One of the factors that seems to be tipping the trend is the ratio between the number of vacant positions and jobs in Quebec, which is falling. “Yes there is a stabilization, but over the year as a whole, the labor shortage tends to decrease, which should remove pressure on wages,” indicates economist Pierre Emmanuel Paradis.

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In addition, a slowdown in gross domestic product growth to 1% is expected in 2024. This is less than the average annual wage increase including planned freezes of 3.7%, according to data aggregated by the Order of CRHA. In its planning tool, it is specified that in 2023, the increase reached 3.5% while it was expected to be 4.1%.

More numerous than in past years, the share of companies considering wage freezes is below normal, although it has gained a few percentage points compared to last year, we confirm.

Unlike 2020, 2021 and 2022, where organizations shared conservative targets well below actual salary increases, Marc Chartrand, senior advisor for total compensation at Gallagher, believes that those issued for 2024 are close to reality.

According to the general director of the Order of CRHA, Manon Poirier, employers are torn between their desire to remain attractive to candidates, and to support their workers affected by inflation. In the medium term, however, such a leveling up of remuneration is not sustainable, she warns.

“The next forecasts will have to be clearly below 3%, closer to the 2.6% or 2.8% that we knew before, which is more sustainable for organizations.”

Especially since macroeconomic data demonstrates that in Quebec, in May 2023, workers regained purchasing power similar to that of March 2020, reports Pierre Emmanuel Paradis.

To change the mentalities

Indeed, “for the moment, remuneration has grown a little faster than inflation since March 2020,” says the economist. People continue to say that they want to catch up with inflation, but we have demonstrated it, it is done. This mentality doesn’t come out easily.”

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However, not all workers are equal in the face of the jump in the cost of living, notes Guylaine Béliveau, head of the national remuneration advisory services practice at Telus Health, and for some, housing particularly affects their budget.

“Yes, we want a better salary, but not at all costs”, nuance Anna Potvin, who observes that job security weighs more and more heavily in the balance.

For organizations that will have to announce a freeze, or that will not meet the expectations of their employees, Marc Chartand recommends having in their hands “an excellent communication plan, and a lot of transparency. You have to be honest with employees, explain the reality.”

To (re)read: Overall compensation: the situation changes in 2024

Companies must focus on the different levers they can use to retain their employees, such as the flexibility they can demonstrate, the agility with which they can resolve the problem, or the learning opportunities it can generate. .

Offering a fair balance between work and personal life, more leave, or adopting good management practices are other ways to make your employer’s image shine, adds Manon Poirier.

Certainly, if we do not offer a competitive salary, it will be easier to retain than to attract new talent, she recognizes, without discouraging organizations. After all, more than ever, they have the possibility of surveying people already employed to assess the quality of a boss.

“People stay a lot because of the culture and the mission of the company,” recalls Guylaine Béliveau.

To telework or not to telework, this is the question that is causing turmoil in many companies at the start of the 2023 school year.

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