Survey shows modest pay growth forecast and rising emphasis on total rewards amid economic uncertainty
For Canadians hoping for a pay increase to offset cost-of-living concerns, a recent pulse survey of nearly 400 Canadian employers reveals that average salary increase budgets for 2026 are expected to remain largely consistent with projections made last summer.
While there is a modest downward adjustment as organizations across industries appear to be fine-tuning compensation plans in response to ongoing economic and trade uncertainties, salary growth forecasts continue to sit above long-term historical norms.
According to the latest Normandin Beaudry Salary Increase Pulse Survey, the national average salary increase budget for 2026 is projected at 3.0%, excluding salary freezes — a slight reduction of 0.1 percentage point compared with previous summer assumptions.
This trend reflects a gradual but sustained easing in budget expectations observed since 2023, as organizations balance the need to manage payroll costs with competitive compensation demands.
The survey finds a strong majority of employers (almost three quarters) are not planning to alter their initial salary budget projections from the summer. Among the minority that are changing their forecasts, more than half intend to reduce planned increases, while the remainder expect to raise them.
In addition to base salary budgets, 42% of respondents have allocated extra funding, averaging about 0.8% of payroll, to support compensation challenges such as retention and targeted pay moves.
Amid these budget patterns, companies are prioritizing comprehensive total rewards strategies. With heightened expectations for transparency and compliance, many employers are enhancing employee engagement initiatives, aligning with legislative requirements like pay equity and transparency, and improving internal communications around compensation. These efforts are aimed at strengthening the overall employee experience beyond traditional base pay increases.
Other indicators from the survey suggest continued optimism in workforce planning. Nearly half of participating organizations expect their annual incentive plans to pay out at or above target levels in 2026, and roughly one-third plan to grow their workforces over the course of the year. This suggests that investment in talent and performance remains a focus even as salary increase budgets moderate.
“As economic and trade uncertainty continues to shape Canada's market, organizations are taking a cautious, gradual approach to salary increase budgets,” said Darcy Clark, senior principal in Compensation at Normandin Beaudry. “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.”
