Competing for talent in a period of economic flux
In the past two years we’ve seen substantial shifts in Canadian tech compensation as companies respond to competing national and global pressures for tech talent. The tech sector in Canada drives growth and innovation across multiple industries, and with increasing investment opportunities in the tech sector early last year, there were large scale hiring and salary increases. At the same time, global competition for tech talent spiked, creating upward pressure on compensation. By the latter half of 2022, there was an abrupt decline in external pressures with rising interest rates, inflation, and corporate downsizing. Many tech companies began taking a more cautious approach to hiring and spending in general. As for this year? While fiscal restraint is the dominant game plan, companies are continuing to feel compensation pressure from the global talent market and pay transparency legislation.
Layoffs and cost reductions cut through tech subsectors
For the past year we’ve seen a steady stream of layoffs across Canada’s tech sector, including several large anchor companies such as Shopify, Amazon, Article, Hootsuite, Skip The Dishes, Lightspeed Commerce, and Thinkific. E-commerce saw the largest reductions, in an abrupt shift from the pandemic hiring frenzy. We’re now seeing layoffs in the gaming industry as well, with companies like Electronic Arts, Unity Software, and Relic Entertainment downsizing staff.
Given this shift in Canada’s tech sector to a climate of cost cutting and layoffs, companies in growth mode are having an easier time hiring and retaining tech talent. According to a recent TAP Network survey, 43% of Canadian tech companies are seeing lower turnover than this time last year.
With some displaced talent having entered the job market, and the sector having lower overall growth projections, lucrative salaries and hiring bonuses are no longer being thrown around like they were a year ago. They just aren’t necessary.
Pay implications of a remote workforce
Remote work appears to be here to stay within the tech sector, with hybrid being the dominant model, and one in five tech companies now operating fully remotely. Remote work is enabling talent to consider national and international job opportunities, and given the exchange rate and higher pay ranges found over the border in the United States, global opportunities continue to put upward pressure on Canadian tech sector salaries. Many US-headquartered companies have shown they are happy to pay Canada-based employees significantly more than local market rates, which of course is driving up local rates as companies strive to compete.
Salary pressure continues due to local, national and global talent markets
Despite lower growth projections and lower turnover, recruitment remains a challenge for leadership and senior technical roles in the tech sector. According to TAP Network’s recent survey, 62% of Canadian tech companies are still finding it difficult to fill senior technical roles, and one third are sourcing internationally for senior technical roles.
Candidate sourcing remains a local, national, and international endeavor this year. For intermediate and senior roles, there is almost as much national recruitment happening as there is locally. While pressure has eased off from recent record highs, this ever-growing sector continues to require more and more talent within Canada, and beyond.
Pay Equity and Pay Transparency Legislation across much of Canada
British Columbia is the latest province to tackle the pay equity gap through legislation, with Bill 13 – Pay Transparency Act becoming law this spring. The key objective of BC’s legislation is to help close the gender pay gap by continuing to address systemic discrimination in the workplace, and move closer to the goal of equal pay for equal work. BC now joins Manitoba, New Brunswick, Nova Scotia, PEO, Ontario, Quebec, and the Federal Government which have all enacted some form of pay equity or pay transparency legislation. Key aspects of BC’s legislation are the inclusion of pay rates or ranges on public job postings and a phased-in requirement to produce pay transparency reports.
The publishing of pay rates or ranges for public job postings will have the most immediate impact. It’s likely to create upward pressure on salaries, as employees below the publicly stated rates will be motivated to seek increases. However, a question remains in my mind as to whether this will actually decrease gender and other pay gaps, given that ranges are just that—a range. Will women, racialized people, and others remain and get hired at the lower end of the ranges, while white cisgender males remain and get hired into the higher end of these ranges?
How will compensation shift this year?
What will happen to Canadian tech sector salaries when the pressures of a global talent market and provincial pay equity/transparency legislations run up against pressures from cost cutting and layoffs? We’ll be watching TAP Network’s annual Tech Sector Salary and Total Rewards Survey carefully to see!
The 2023 survey will be released September 1st.
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