“Yes there is a stabilization, but for the year as a whole, the labor shortage will decrease, which will remove the pressure on wages,” suggests economist Pierre Emmanuel Paradis. (Photo: 123RF)
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Wake-up-morning. 2024 could mark the end of salary increases close to 4%, as companies cannot grow enough in their turnover to maintain them at such levels. And it upsets the owners.
That’s one of the conclusions we drew after unveiling 2024 salary projections by the Order of Approved Human Resource Advisors (CRHA). The firm aggregated data from surveys conducted by CGC-Talent, Gallagher, Mercer, Saucier Conseil, Telus Santé, WTW and Normandin Beaudry.
Anna Potvin, later partner and head of remuneration practices, marveled at their annual study announcing salary growth reaching 3.8% in 2024. Very favorable,” she recalls.
One of the factors driving the trend is the declining ratio between the number of vacancies and the number of jobs in Quebec. “Yes there is a stabilization, but for the year as a whole, the labor shortage will decrease, which will remove the pressure on wages,” suggests economist Pierre Emmanuel Paradis.
Additionally, gross domestic product growth is expected to slow to 1% in 2024. This is lower than the average annual wage increase including planned freezes of 3.7%, according to data compiled by the Order of CRHA. In its planning tool, growth is expected to reach 3.5% in 2023, while it is expected to be 4.1%.
Much more than in previous years, the share of companies considering wage freezes is lower than usual, although it has gained a few percentage points compared to last year, we confirm.
Apart from 2020, 2021 and 2022, where firms have shared much less conservative targets than actual salary increases, those issued for 2024 are closer to reality, according to Mark Chartrand, senior adviser for total compensation at Gallagher.
According to Manon Poirier, General Director of the Order of CRHA, employers are torn between their desire to be attractive to candidates and their desire to support their workers affected by inflation. But in the medium term, increasing remuneration that much is not sustainable, she warned.
“Next projections should clearly be below 3%, closer to the 2.6% or 2.8% we’ve known before, which is more sustainable for firms.”
In Quebec in May 2023 in particular, macroeconomic data demonstrate that workers regained the same purchasing power as in March 2020, reports Pierre Emmanuel Paradis.
To change mindsets
Indeed, “for now, wages have grown slightly faster than inflation since March 2020,” the economist said. People keep saying they want to catch inflation, but we demonstrated it, it was done. This mentality does not go away easily.”
However, not all workers are equal in the face of cost-of-living increases, noted Guylaine Beliveau, head of the national Remuneration Advisory Services practice at Telus Health, and for some, housing will especially impact their budget.
“Yes, we want a good salary, but not all expenses”, nuances Anna Potvin, noting that job security hangs more in the balance.
For organizations that need to announce a freeze or are unable to meet their employees’ expectations, Mark Chartand recommends having “an excellent communication plan and a lot of transparency” on their hands. You need to be honest with the employees, explain the reality.
(Again) Read: Total compensation: Situation will change in 2024
Companies should focus on the various levers they use to retain their employees, whether it’s the flexibility they can demonstrate, the agility they can solve a problem, or the learning opportunities it can create.
Providing a fair balance between work and personal life, giving more vacations or adopting good management practices are other ways to polish your employer’s image, adds Manon Poirier.
Certainly, she noted, if we don’t offer competitive pay, it’s easier to retain than attract new talent, without discouraging firms. After all, more than ever, they have the opportunity to survey people already on the job to gauge the quality of the boss.
“People stay longer because of the culture and mission of the organization,” recalls Guylaine Belive.