Amid a backdrop of economic uncertainty and a tight labour market, Canadian employers are still planning average salary increase budgets of 3.8 per cent, excluding salary freezes, in 2023 — a rate higher than historical trends, according to a survey by Normandin Beaudry.

The survey, which polled more than 750 employers and nearly 1.8 million employees, also found more than one in 10 organizations are planning average salary increase budgets above five per cent and, in some cases, as high as 20 per cent. Employers are continuously adapting to market pressures, with average salary increases granted in 2022 reaching 3.8 per cent, exceeding the initial projections of 3.4 per cent and 2.8 per cent published in February 2022 and July 2021, respectively.

Read: Employers increasing salaries due to inflation, labour market challenges: survey

Nearly half of employer respondents allocated an additional budget of 1.9 per cent on average in 2022, higher than the initial forecast of 1.2 per cent. Projections for next year revealed a third of organizations plan to grant an additional budget of 1.4 per cent on average.

Just one per cent of respondents implemented a salary freeze in 2022 or noted they intend to in 2023. Uncertainty related to the coronavirus pandemic had pushed the number of organizations that implemented a salary freeze in 2021 to eight per cent, when it was typically between three and five per cent prior to the pandemic.

Respondents with fewer than 50 employees led the pack with an average projected budget of 4.5 per cent, followed by companies with 50 to 99 employees (4.1 per cent) and those with 100 to 199 employees (four per cent), excluding salary freezes.

Read: Average salary increase rose to 2.8% in 2021: survey