SALARY INCREASE BUDGET OF 3.3% ALIGNS WITH PROJECTIONS
TORONTO, Jan. 22, 2025 /CNW/ - Normandin Beaudry, a leader in actuarial and total rewards consulting services, has released the results of its pulse survey on salary increase budget forecasts for 2025. Conducted in November of 2024, nearly 400 Canadian organizations were surveyed by the firm's compensation experts to evaluate their initial projected 2025 salary increase budget established in the summer of 2024 and determined that the forecast was closely aligned to the survey results of 3.3%.
HIGHLIGHTS
The pulse survey showcases that the salary increase budget forecasts closely align with initial projections
The survey reveals that 68% of participating organizations made no change to their initial 2024 summer budget forecast for 2025. Of those changing their initial projections, 65% are reducing their initial budgets with cost reduction efforts as the main motivator.
The average Canadian salary increase budget forecast for 2025 is closely aligned with initial projections of 3.3%, slightly lower than the summer 2024 of 3.4%, excluding freezes. On a year-over-year basis, the survey reveals continued gradual decline in average salary increase budgets following a series of sharp increases realized from 2021 to 2023. Darcy Clark, Senior Principal, Compensation at Normandin Beaudry explains this phenomenon: "Organizations are trying to find the right balance between retaining top talent, while also managing their compensation spend to remain agile and competitive amid an evolving and uncertain geopolitical landscape. While less aggressive than last year's 3.6%, it's important to note that the forecast for 2025 remain above historical norms and are outpacing current rates of inflation."
What type of companies are making changes to their budget forecasts?
Most industries reported they would make minor reductions to their initial salary increase budgets. Industries with the most substantial decreases are in the electronic gaming and visual effects, transportation and warehousing, and telecommunications and data processing/warehousing industries. The more conservative increase budget forecast from the survey may reflect substantial increases to compensation programs implemented over the last several cycles, cost reduction efforts, and decreased pressure for talent in the market. In contrast, initial salary increase budgets are increasing in finance and insurance, public services, and pharmaceutical and biotechnology industries. These increases are likely linked to the competitive nature of the market and serve as a strategy to retain key talent and to address any internal equity issues.
Additional budget for more flexibility
Forty-two percent of organizations that participated in the survey also plan to set aside an average additional budget of 0.9% in 2025. "By reserving these resources, organizations are positioning themselves to better address potential challenges during the next compensation cycle," explains Clark. "This strategy provides them with an opportunity to tackle internal inequalities more thoroughly with ad hoc salary adjustments. Additionally, setting aside a portion of their budget can help support salary increase differentiation for high performers and address retention efforts for highly strategic or business-critical roles."
Stable total budgets
In Canada, the average total salary increase budget[1] remains at 3.6% for 2025, slightly lower than the initial forecast of 3.7% from the summer of 2024, excluding freezes. Average total salary increase budget forecasts by ownership structure include:
- Not-for-profit organizations: 4.1%
- Privately held organizations (not listed on a stock market): 3.9%
- Publicly traded organizations (listed on a stock market): 3.4%
- Government organizations / Crown corporations: 3.6%
Total rewards, an integral part of the solution
As salary increase budgets continue to decrease and stabilize to pre-pandemic norms, organizations must strategize to maintain competitiveness beyond cash compensation. For 2025, organizations appear to be focusing internally on their total rewards foundations, with 58% ensuring they remain competitive in their total rewards programs, 57% focusing on employee engagement and communication, and 32% reviewing their job architectures and hierarchy. Prioritizing these areas can help organizations ensure that they are better supporting their employees, while boosting comprehension and appreciation of the programs that exist to support talent development and growth. This internal focus can help ensure they remain competitive and an employer of choice.
The full report and interactive tool, with details by province, industry sector, size and type of organization, are available on the Normandin Beaudry website.
About Normandin Beaudry
Founded in 1992, Normandin Beaudry is a leader in actuarial and total rewards consulting services with offices in Montreal, Toronto and Quebec City. Its team of over 350 people serves clients across Canada in various areas of total rewards expertise: Pension, Savings, Investment Consulting, Pension Plan Administration, Group Benefits, Compensation, Health, Performance and Communication.
In 2023, Normandin Beaudry enhanced its global presence by becoming an equal shareholder of MBWL International, a joint venture between Milliman, Barnett Waddingham and Lurse, while maintaining its independent status.
About our compensation expertise
Normandin Beaudry's team of over 40 compensation consultants is one of the largest in Canada. Through the sound and innovative use of data and technology, our versatile and creative experts provide clients with unique and simple solutions that address their strategic and operational needs. For more details, visit https://www.normandin-beaudry.ca/en/areas-of-expertise/compensation/
[1] Total budget includes the salary increase budget and the additional budget.
SOURCE Normandin Beaudry
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