Photo Credit: Normandin Beaudry

🧑🔎💵 2026 Salary Increases: Canadian Budget Forecasts Remain Tightly Aligned with Summer Projections

Tuesday, 03 February 2026 08:00.AM

- Average increases of 3.0% projected for 2026.
- Employers increasingly pressed to rethink compensation and total rewards strategies amid ongoing uncertainty.
- 42% of organizations plan to secure additional budgets to address compensation challenges.
- Slow but steady decline in salary increase budgets observed since 2023. -

Normandin Beaudry, a leader in actuarial and total rewards consulting services, has released the findings of its Salary Increase Pulse Survey, with nearly 400 Canadian organizations participating during the last quarter of 2025. Results indicate that Canadian organizations are expected to continue slightly scaling back their salary increase budgets, with an average projected increase of 3.0% in 2026, excluding salary freezes. This is a further reduction of 0.1% compared to results from summer 2025.

"As economic and trade uncertainty continues to shape Canada's market, organizations are taking a cautious, gradual approach to salary increase budgets. At the same time, heightened expectations for transparency are pushing organizations to refine and clearly articulate the holistic employee experience and total rewards they offer," said Darcy Clark, Senior Principal, Compensation at Normandin Beaudry.

HIGHLIGHTS

Organizations making salary budget changes have varying intentions
Results indicate that nearly three-quarters of organizations (74%) are not planning any changes to their initial salary increase budget projections from last summer. For the 26% of participating organizations planning adjustments to their initial budget, more than half will be making a reduction and the rest are intending to increase their initial budget.

The Canadian national average salary increase budget, originally projected at 3.1% excluding wage freezes, has now decreased by 0.1%. This reduction is aligned with the steady decline observed since 2023. In addition to the traditional salary increase budget, 42% of respondents have allocated an average of 0.8% of payroll for additional budget funds.

Total rewards strategies at centre of employee experience

Organizations are also focusing internally on their total rewards foundations in 2026, with strategies aimed at:

• Employee engagement: 58%
• Compliance with legislative requirements (pay equity and transparency): 47%
• Employee communication: 42%

With employees expecting greater levels of transparency, organizations are focused on developing and refining their broader employee experience and total reward strategies.

Workforce increases projected

Other economic indicators remain positive with almost half of organizations (47%) expecting their annual incentive plan to pay at or above target and 35% of organizations planning an increase in their workforce during 2026.

SOURCE: Normandin Beaudry

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