Salary increase projections for 2026: Budgets continue to decline

As Canada faces an economic slowdown compounded by ongoing tariff pressures and trade uncertainty, strategic planning around salary increases is essential to retain talent and maintain workforce strength.

In just four weeks, more than 500 organizations participated in Normandin Beaudry’s 2026 Salary Increase Survey. Preliminary results point to a downward trend, with actual average Canadian salary increase budgets in 2025 reported at 3.2%—slightly below the initial projection of 3.4%. Current projections for 2026 are trending towards an average salary increase of 3.1%, excluding salary freezes.

Preliminary results show that organizations are continuing to scale back their salary increase budgets for 2026, partly as a means to recession-proof their operations and also due to a less constrained labour market.

In 2026, less than half of Canadian organizations plan to allocate an average additional budget of 1.1%. This is in contrast to 2025, when approximately half of responding organizations granted an additional budget averaging 1.0%. These supplemental budgets are intended to provide organizations with flexibility to respond to evolving compensation needs throughout the year, including:

• Market salary adjustments
• Employee retention
• Differentiated rewards for high performers
• Accelerated progression of employees in the lower end of their pay range
• Compression and internal equity issues

Participate in this survey by July 18 to receive detailed results in September, including exclusive information on:

• Market / economic impact
• Tariffs and economic uncertainty
• Pay transparency strategies
• Artificial intelligence
• Diversity, equity and inclusion