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It’s almost over, salary increases are more than 3%.

It’s almost over, salary increases are more than 3%.

“Yes, there is stability, but over the course of the year as a whole, the labor shortage tends to decrease, which would remove the pressure on wages,” says economist Pierre-Emmanuel Paradis. (Image: 123RF)

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Waking up in the morning. 2024 could mark the end of salary increases approaching 4%, because companies will not see enough growth in their turnover to maintain them at those levels. This worries employers.

This is one of the conclusions we reached after the 2024 salary forecasts were revealed by the Certified Human Resource Consultants (CRHA). The organization compiled data from surveys conducted by CGC-Talent, Gallagher, Mercer, Saucier Conseil, Telus Santé, WTW and Normandin Beaudry.

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

One factor that appears to be reversing this trend is the ratio between the number of vacancies and jobs in Quebec, which is declining. “Yes, there is stability, but over the course of the year as a whole, the labor shortage tends to decrease, which would remove the pressure on wages,” says economist Pierre-Emmanuel Paradis.

In addition, GDP growth is expected to slow to 1% in 2024. This is lower than the average annual wage increase including the planned freeze of 3.7%, according to data compiled by the CRHA. It was specified in the planning tool that in 2023, the increase would reach 3.5%, while it was expected to be 4.1%.

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We confirm that the percentage of companies that are considering freezing wages is more numerous than it was in previous years, and is lower than the normal rate, although they gained a few percentage points compared to last year.

Unlike 2020, 2021 and 2022, where organizations shared conservative goals that fell well short of actual salary increases, Marc Chartrand, senior total compensation consultant at Gallagher, believes those released for 2024 are close to reality.

According to CRHA Director General, Manon Poirier, employers are torn between their desire to remain attractive to candidates, and to support their workers affected by inflation. However, she warns that such a rise in wages is not sustainable in the medium term.

“The next forecast should clearly be below 3%, closer to the 2.6% or 2.8% that we knew before, which is more sustainable for institutions.”

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

To change mindsets

In fact, “right now, wages have grown slightly faster than inflation since March 2020,” the economist says. People still say they want to catch up with inflation, but we’ve proven it, and it’s done. This mentality does not come easily.”

However, not all workers are equal in the face of the jump in the cost of living, notes Guillén Beliveau, head of the National Wage Advisory Services practice at Telus Health, and for some, housing particularly impacts their budget.

“Yes, we want a better salary, but not at any cost,” says Anna Potvin, who has noticed that job security is weighing more and more heavily on the scale.

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

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

Companies should focus on the different tools they can use to retain their employees, such as the flexibility they can demonstrate, the flexibility with which they can solve a problem, or the learning opportunities they can generate.

Providing a fair work-life balance, more vacations, or adopting good management practices are other ways to make your employer’s image shine, adds Manon Poirier.

It recognizes that if we don’t offer competitive salaries, it will be easier to retain than attract new talent, without discouraging organizations. After all, more than ever before, they have the ability to survey people already working to assess the quality of their boss.

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

To work remotely or not to work remotely, this is the question that is causing turmoil in many companies with the beginning of the 2023 academic year.

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