What's Happening?
According to a report by Normandin Beaudry, salary increase budgets in Canada are projected to grow by an average of 3.0% in 2026. This projection is based on a survey of nearly 400 Canadian organizations
conducted in the fourth quarter of 2025. The 3.0% increase represents a slight reduction from the previous summer's projection and continues a trend of declining salary increase budgets since 2023. The report highlights that 74% of organizations do not plan to change their initial salary increase budget projections, while 26% are considering adjustments, with more than half planning reductions. Additionally, 42% of organizations have allocated an average of 0.8% of payroll for additional budget funds.
Why It's Important?
The projected increase in salary budgets reflects a cautious approach by Canadian organizations amid ongoing economic and trade uncertainties. This trend could impact employee retention and recruitment strategies, as companies balance the need to remain competitive with financial constraints. The allocation of additional budget funds for payroll suggests that some organizations are preparing to address potential workforce challenges. The broader economic indicators, such as expectations for annual incentive plans and headcount increases, indicate a mixed outlook for the Canadian labor market in 2026.
