Note: This post is part of our Special Report: Top 10 people & culture trends for 2024.
Compensation will remain critical for hiring and retention in 2024 and beyond.
With the cost of living going up, inflation still high (and not expected to fall to the target 2% until mid-2025), and 60% of mortgages due to reset with higher interest rates over the next two years (resulting in monthly payments increasing by as much as 30%-48%), more Canadian employees are going to be looking for higher salaries and more/better total rewards.
Here are some more sobering stats:
- 48% of Canadians have never been more stressed out about money. (RBC, Sept 2023)
- 40% of Canadian workers say pay and comprehensive rewards programs are the most important factor in deciding whether to stay with their employer. (EY, Sept 2023)
What we’re seeing for candidates and employers
- Candidates: This year, many will favour a higher base salary over commissions and variables, as well as more dependable, stable roles (“boring but steady” is the name of the game in 2024).
- Employers: We foresee new total reward offerings such as access to a financial planner, subsidized transportation for those requiring onsite work, and for those hiring recent grads, support paying off student loans. We also predict continued restructuring, as clients hire new, specialized skills/experience at higher rates to compete in today’s market. And among employers who might have struggled to find talent when shortages were most severe, we predict some “talent hoarding” – they’ll do what it takes to hold onto their most talented people, including paying more, offering special benefits, etc.
Salary increases in 2024
In the near term, we’re seeing a continuation of the wage and inflation standoff: As long as wages keep rising, the Bank of Canada will keep interest rates high to tame inflation, perpetuating the cycle.
The good news is experts predict a return to more normal wage increases this year. According to the Conference Board of Canada we can expect an average wage increase of 3.5% in Canada this year for non-unionized employees (down from 4.1% in 2023).
Tips for 2024
There will be a persistent shortage of candidates in key sectors like construction, healthcare, legal, IT, and finance and accounting, particularly for specialized skillsets within these industries, so compensation will still be critical to attract experienced candidates in these sectors in 2024.
- If you can’t pay top salaries, highlight any special offerings right in the job ad and in every interaction with top candidates: e.g., mat leave top-ups, unique paid time off like sabbaticals, extra vacation, flex days, wellness days, new parent/grandparent days etc., learning and development opportunities, access to a financial planner, help paying student loans, flexible benefits, purpose and values, stability, flexibility in location, hours, learning, mentorship and education reimbursement, career advancement opportunities, pension, mental/emotional health benefits, etc.
- To help offset the high cost of living, consider offering unique benefits, including:
• Free or subsidized meals at work
• Subsidized transportation (such as a transit or parking pass)
• Subsidized phone and/or internet costs for remote workers
• Support in setting up and maintaining a home office
- To support mental health: Offer a “lifestyle account” to help employees access non-essential, life-enhancing pursuits such as hobbies, well-being activities, or adventure (13% of US employers now offer a lifestyle account, according to Mercer).
- To attract Gen Z and millennials, highlight your openness to AI: These generations want to experiment with new tools and technologies; be prepared to ask them how they use AI in their work and explain how your org plans to use it in the future.
- Advertise that you are a family-friendly employer: Show that you are open and supportive of candidates at every stage of life. Highlight that you support those having families and caring for others; you are open to career development and advancement opportunities for women who are pregnant; you provide mat leave and pat leave top-ups and subsidies for fertility treatments, and more.
Read our next trend to watch in 2024: Trend 5: Pay transparency is coming: Here are some ways to get ready in 2024