Canadians are getting a salary increase this year, although a slightly more modest one than initially projected. But if you work for a non-profit, expect a bigger boost.
Normandin Beaudry, an actuarial consulting service, surveyed almost 400 Canadian organizations in November 2024 and found that the salary increase budget for 2025 is at 3.3 per cent. That’s only slightly lower than the initial forecast of 3.4 per cent from the summer of 2024.
“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,” explained Darcy Clark, senior principal of compensation at Normandin Beaudry.
Normandin Beaudry
The 3.3 per cent pay increase is lower compared to 2024 when, on average, Canadian workers got a 3.6 per cent pay rise.
However, salary increases have been dropping over the years. That’s because salary increase budgets are slowly returning to pre-pandemic levels as the labour market “balances out and inflationary pressures ease.”
“While less aggressive than last year’s 3.6 per cent, it’s important to note that the forecast for 2025 remains above historical norms and is outpacing current rates of inflation,” said Clark.
Normandin Beaudry
A closer look reveals that 68 per cent of organizations who took part in the survey stuck to their initial budget for 2025. However, 65 per cent of organizations that did make changes reduced their initial budgets, citing cost reduction as their main reason.
In addition, 42 per cent of organizations said they’re setting aside an average budget of 0.9 per cent.
“By reserving these resources, organizations are positioning themselves to better address potential challenges during the next compensation cycle,” said Clark.
Non-profit workers to see highest pay rise
The average increase depends on the type of company or organization you work for. The average total salary increase budget forecasts by ownership structure include:
- Not-for-profit organizations: 4.1 per cent
- Privately held organizations (not listed on a stock market): 3.9 per cent
- Publicly traded organizations (listed on a stock market): 3.4 per cent
- Government organizations/Crown corporations: 3.6 per cent
Your pay rise also depends on your industry.
Workers in the electronic gaming and visual effects, transportation and warehousing, and telecommunications and data processing industries are expected to see the lowest pay rise. In comparison, those in finance and insurance, public services, and pharmaceutical and biotechnology industries are likely to see the highest pay increase.
As budgets decrease, organizations must look for ways to remain competitive beyond cash compensation. As a result, 58 per cent plan to remain competitive in their total rewards programs, 57 per cent want to focus on employee engagement and communication, and 32 per cent will review 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,” states the report.
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