Canada U S Salary Increase To Hold Steady In 2026

Anticipated recession or weaker financial results top reasons for salary budget adjustments Salary budgets in Canada and the United States are projected to remain stable in 2026, according to the latest Willis Towers Watson (WTW) 2025 Salary Budget Planning Report — Global (July edition). Employers in both countries are planning median salary increases of 3.5% for the coming year, matching the actual and planned increases for 2025. The top factors affecting salary budget adjustments include: “While top-line budgets are generally holding steady, the real shift is happening beneath the surface: Organisations are being more deliberate about how they allocate pay, where they focus investment and what outcomes they expect... Only 16% of U.S.

companies expect next year’s budget growth to exceed the 2025 level. U.S. employers project an average 3.5% increase in their salary budgets for 2026, a tick below the 3.6% climb they’re experiencing this year. Despite inflationary pressures, the stagnant level of budget hikes reflects both concern over the economy and labor-market conditions that favor employers. That’s according to Payscale, a provider of compensation data and software, which surveyed 1,551 compensation managers in the United States and Canada. Only 16% of U.S.

organizations anticipate a 2026 salary increase budget that is higher than this year’s. The same proportion expects the budgets to be lower next year, while 68% believe they’ll hold steady. Among those anticipating lower budgets, 66% cited economy-related worries as the primary reason. In previous years, the leading reason was that higher pay increases were given the year before due to rising labor costs and inflation, Payscale wrote in its survey report. Now in its fifteenth year, Salary.com’s US and Canada National Salary Budget Survey offers participating organizations information on how their peers are budgeting for salary increases including merit increases, market adjustments, cost-of-living increases, and... The survey also provides data on salary structure increases and current variable pay practices.

Download the preliminary results for 2025-2026 salary increase budgets. © document.getElementById("sa-year-span").innerHTML = new Date().getFullYear() Salary.com. All rights reserved. © document.getElementById("sa-year-span-mobile").innerHTML = new Date().getFullYear() Salary.com. All rights reserved. Referring to the current political and business environment as a “time of change,” an April report by consulting firm WTW on widescale U.S.

policy shifts pointed to American workers’ concern about the state of their anticipated salary increases. In that survey, 56% of surveyed employers indicated their workforces are worried about base pay increases. Respondents tried to temper those fears, even slightly, with 48% stating they anticipated no impact to this year’s projected salary increases but some impact on their 2026 budget, and 28% anticipating no impact this... With that as a backdrop, WTW released its Salary Budget Planning Report on Tuesday, July 8, which, on its face, could perhaps be summed up as: the more things change, the more things stay... Some complex activities are supporting — and even countering — that smoothness. According to the report, the composite look from 1,569 surveyed U.S.

organizations shows average salary increase budgets for 2026 will remain stable at 3.5%, matching American employers’ actual increases for 2025. (WTW had initially predicted 3.7% increase budgets for 2025.) The firm’s expanded outlook report for 2026 reflected similar stability for select countries outside of the U.S. “While top-line budgets are generally holding steady, the real shift is happening beneath the surface,” said Brittany Innes, the director of rewards data intelligence at WTW. “Organizations are being more deliberate about how they allocate pay, where they focus investment and what outcomes they expect to drive. Employers are no longer simply reacting to economic signals; they’re reimagining how to best support broader business goals despite uncertainty.” WTW’s data points for 2026 projections and 2025 actuals resemble those found in other recently released salary budget survey reports for the U.S.

market. Results are out: discover them by clicking here. 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: Mercer, a business of Marsh McLennan (NYSE: MMC) and a global leader in helping clients realize their investment objectives, shape the future of work and enhance health and retirement outcomes for their people, today... The survey of more than 1,000 US organizations revealed that on average, employers plan to hold base salary increases for merit at 3.2%, and total increases at 3.5%, which encompasses all salary increases, including...

Looking ahead, 61% of the employers surveyed anticipate that the economy will have a moderate to significant impact on compensation decisions in 2026. Nevertheless, employers remain committed to prioritizing skill and talent development (34%), market competitiveness (31%), and compensation adjustments (24%) next year. However, the data suggests a disconnect between these priorities and how budgets are allocated. More than 8 out of 10 (83%) employers indicated they would distribute their salary increase budgets equally across the organization, rather than directing more resources towards high-demand skills or critical market gaps. Further, employers plan to promote fewer employees in 2026 – around 9% of their workforce, down from 10% in 2025, with an average pay increase for promotions of 8.7%. “Employers have a significant opportunity to strategically shape their spending to better align with critical talent goals,” said Lauren Mason, Mercer’s US Workforce Solutions Leader.

“By focusing compensation budgets on high-demand skills rather than spreading resources too thin, leaders can more effectively drive their workforce strategy and secure the talent essential for success.” TORONTO, CA, October 16, 2025—Canadian organizations are planning average base salary increases1 of 3.3% in 2026, according to Eckler’s latest compensation eplanning survey (excluding salary freezes). This is slightly below the actual increase of 3.4% in 2025, signalling a more cautious approach to budget planning amid slowing economic conditions and stabilizing inflation. While the Bank of Canada is cutting interest rates to ease borrowing costs and stimulate growth, rising unemployment and ongoing uncertainty are keeping employers conservative. At the same time, soaring housing costs and persistent inflation continue to exert upward pressure on wages. “Employers are signalling that while the economy has cooled, the war for talent is not quite over,” said Anand Parsan, Principal at Eckler.

“Only 5% of employers are considering salary freezes, and while 29% remain undecided, most are planning similar or lower salary increases compared to 2025. Trade tensions between Canada and the U.S. are also contributing to financial uncertainty, prompting employers to balance cost control with the need to reward and retain key talent.” The West leads in wage growth, while Atlantic provinces, Quebec, and the northern territories lag behind. Projected base salary increases range from 2.9% to 3.7%: Canadian organizations are balancing foundational compensation practices with strategic enhancements.

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