Authors: Caroline Long Ravi Patel
Economic and job market conditions are stabilizing, and this stabilization is reflected in organizations' salary increase forecasts, which are closer to pre-pandemic levels. However, demographic attraction and retention challenges will continue to put pressure on the job market for the coming years. Here are the highlights of our annual salary survey, which includes over 500 participating organizations.
The main factors influencing the determination of this year's increase budgets are the organization's ability to pay (72%), competitiveness in relation to the market (71%), and changes in the cost of living (61%).
Adjusting employee salaries and salary structures
Actual salary-increase budgets in 2024 averaged 3.9% in Canada. The forecasted 2025 salary increase budget is, on average, slightly lower, at 3.5% in Canada.
The average budget planned for 2025 is between 2.8% and 3.8% depending on the sector — the financial, professional, scientific and technical services sectors being the most generous. The agriculture and social services sectors have the lowest budget of all business lines, closer to 2.8%.
Salary structure adjustment budgets are 2.9% on average in Canada, which is comparable to last year, but still high compared to pre-pandemic years when they were around 2%. Approximately 19% of organizations plan to freeze their structure in 2025, while 7% expect to freeze salaries.
It's always important to provide a higher salary increase budget than that of the structure to enable employees' salary positioning to progress according to their development.
Additional budget
Thirty-four percent of organizations surveyed anticipate an additional budget of 2.1% on average to recognize specific cases (high-potential employees, fast-growing employees, employees in jobs with labour shortages, etc.). which is similar to pre-pandemic trends that ranged from 1.5% to 2%.
Variable compensation
Sixty-seven percent of organizations offer variable compensation to at least one employee category. This percentage increases to 85% when we consider only for-profit corporations. Of these organizations, 58% indicated that an individual performance component was included in the enhancement formula.
Practices to attract and retain
In the past 12 months, nearly half of organizations continue to use non-monetary programs such as career development to retain employees. These programs are used more compared to 2023 (31% of organizations in 2023, compared to 44% in 2024 and 42% in 2025). As non-monetary programs are more often leveraged, out-of-scale payments are down when comparing data from 2023 (44%) with that from 2024 (32%) and 2025 (35%).
Pay transparency
Pay transparency is becoming increasingly important in discussions within organizations. Participating organizations indicated that they would ultimately like to have an established and widely shared total rewards philosophy with employees (25%), want to share salary scales (26%) or have an open discussion on employees' position on their scale (29%). This data represents the status quo for 50% of organizations, while it's a step towards greater transparency for 42% of them.
Total rewards management and communication
As the trend towards pay transparency increases, it becomes even more critical to equip managers with the skills needed to independently and effectively explain to employees the "why" and "how" of compensation programs.
Seventy-two percent of organizations say managers are responsible for communicating total rewards to employees. Of this number, 73% say managers have the tools and resources to help them communicate compensation to employees. The tools or resources available to managers are typically HR department support (93%), organizational policies and documentation (75%). Few organizations (32%) offer compensation-specific training.
