Canadian organizations plan to increase salaries by an average of 3.11 per cent in 2026, marking a continued slowdown in wage growth for the third consecutive year, according to TELUS Health’s 43rd annual salary projection survey.
The projected increase for non-unionized workers represents a decline from the 3.35 per cent average base salary increase recorded in 2025, found the survey of 377 employers conducted between June and August 2025. Despite the slower growth, salary increases are still expected to outpace the current inflation rate of 1.9 per cent for the second consecutive year.
The survey reveals a seven-year trend of declining salary growth from peaks reached in 2022-2023, when increases averaged over four per cent. Only 0.8 per cent of organizations plan to freeze salaries in 2026, down significantly from 5.6 per cent that implemented freezes in 2025.
Economic pressures reshape compensation strategies
Market uncertainty and concerns over international tariffs are prompting Canadian organizations to take a more cautious approach to salary planning, said Guylaine Béliveau, national practice leader for compensation consulting at TELUS Health.
“Three years running, we’re seeing salary projection declines — a clear signal that economic uncertainty and stabilizing inflation are fundamentally reshaping how Canadian organizations approach compensation strategy,” Béliveau said. “While still outpacing the national inflation rate, our results show a normalization of salary budgets tempered by caution.”
When asked about strategies to address current economic conditions, organizations ranked their top three priorities as increased use of artificial intelligence (39.2 per cent), investment in innovation to increase productivity (36.1 per cent), and reducing non-human capital costs (29.4 per cent), according to the survey.
Regional salary projections vary significantly
Provincial data shows substantial variation in 2026 salary increase projections across Canada:
| Province | 2025 Actual (Incl. Freezes) | 2025 Actual (Excl. Freezes) | 2026 Projected (Incl. Freezes) | 2026 Projected (Excl. Freezes) |
|---|---|---|---|---|
| Alberta | 2.77% | 3.25% | 3.02% | 3.08% |
| British Columbia | 3.33% | 3.61% | 3.01% | 3.09% |
| Manitoba | 3.95% | 3.95% | 3.43% | 3.43% |
| New Brunswick | 2.88% | 2.88% | 3.25% | 3.25% |
| Newfoundland & Labrador | 3.17% | 3.17% | * | * |
| Nova Scotia | 3.40% | 3.40% | 3.00% | 3.00% |
| Ontario | 3.10% | 3.25% | 3.04% | 3.07% |
| Quebec | 3.29% | 3.29% | 3.21% | 3.21% |
| Saskatchewan | 3.70% | 3.70% | 2.95% | 2.95% |
| National Average | 3.15% | 3.35% | 3.07% | 3.11% |
New Brunswick is the only province showing growth in salary increase rates for 2026, with a jump of 0.37 percentage points over 2025 levels. Saskatchewan registered the largest drop among all provinces, falling 0.75 percentage points from its 3.70 per cent increase in 2025, according to TELUS Health.
Technology and energy sectors lead increases
Industry sector projections reveal significant variation in compensation planning:
| Industry | 2025 Actual (Incl.) | 2025 Actual (Excl.) | 2026 Projected (Incl.) | 2026 Projected (Excl.) |
|---|---|---|---|---|
| Arts, Entertainment, Hospitality | 2.63% | 3.28% | 3.05% | 3.05% |
| Business Services | 2.58% | 2.58% | 2.60% | 2.60% |
| Chemical | 3.38% | 3.38% | 3.19% | 3.19% |
| Construction | 3.20% | 3.37% | 3.03% | 3.21% |
| Consumer Goods (Durable) | 2.50% | 3.13% | 3.00% | 3.00% |
| Consumer Goods (Non-durable) | 3.06% | 3.06% | 2.79% | 2.79% |
| Education | 2.72% | 2.72% | 2.93% | 2.93% |
| Finance & Insurance | 3.50% | 3.50% | 3.15% | 3.15% |
| Forestry, Farming, Fishing | 2.72% | 3.40% | 2.92% | 2.92% |
| Healthcare | 3.28% | 3.28% | 2.73% | 2.73% |
| High Technology | 2.97% | 3.47% | 3.64% | 3.64% |
| Industrial Goods | 3.26% | 3.26% | 3.16% | 3.16% |
| Information Technology | 2.74% | 2.74% | 3.25% | 3.25% |
| Life Sciences | 3.49% | 3.49% | 3.39% | 3.39% |
| Media & Telecommunications | 3.15% | 3.15% | 2.70% | 2.70% |
| Mining & Metals | 3.76% | 3.76% | 2.96% | 2.96% |
| Not-for-Profit | 3.29% | 3.35% | 3.12% | 3.20% |
| Oil & Gas | 1.67% | 3.68% | 3.07% | 3.58% |
| Professional Services | 3.70% | 3.96% | 3.09% | 3.09% |
| Public Administration | 2.47% | 3.09% | 3.17% | 3.17% |
| Real Estate | 3.42% | 4.28% | 3.25% | 3.25% |
| Retail | 2.52% | 2.80% | 2.90% | 2.90% |
| Transportation & Warehousing | 3.05% | 3.05% | 3.12% | 3.12% |
| Utilities | 3.11% | 3.39% | 2.92% | 2.92% |
| Wholesale Trade | 3.20% | 3.20% | 3.13% | 3.13% |
| National Average | 3.15% | 3.35% | 3.07% | 3.11% |
Information Technology shows the largest improvement, jumping from 2.74 per cent in 2025 to a projected 3.25 per cent in 2026. Real Estate faces the steepest decline, dropping from 4.28 per cent in 2025 to a projected 3.25 per cent in 2026, the survey found.
Salary structure adjustments remain modest
Beyond base salary increases, organizations are adjusting their salary range structures at a national average of 2.51 per cent for 2026, compared to 2.76 per cent in 2025. These adjustments reflect changes to salary range midpoints or maximum scales, according to TELUS Health.
The percentage of organizations implementing salary range freezes dropped to 5.6 per cent in 2026 from 16.7 per cent in 2025, indicating greater confidence in structural compensation adjustments. However, 21.7 per cent of organizations remain undecided about salary range adjustments for 2026.
The data shows salary freeze rates peaked at 36.0 per cent in 2020 during the pandemic, dropping to projected levels of just 0.8 per cent for 2026, according to TELUS Health.
AI adoption accelerates amid budget constraints
Organizations are increasingly investing in artificial intelligence to boost productivity as salary budget growth slows. The percentage of organizations exploring AI use increased to 77 per cent in 2026 from 74 per cent in 2025.
Enterprise-wide AI consideration increased to over 31 per cent compared to 23 per cent last year, showing organizations are moving beyond department-specific implementations. When asked about human capital priorities, 31 per cent of respondents included leveraging AI strategies, up from 18 per cent in 2025, according to the survey.
Total rewards approach gains importance
As base salary growth moderates, organizations are emphasizing comprehensive compensation packages. The most common benefit offerings include:
| Benefit / Reward Element | Prevalence (%) |
|---|---|
| Group Health Benefits | 96.0% |
| Vision Care | 95.1% |
| Short-Term Disability | 84.4% |
| Group RRSP | 76.1% |
| Employee Perquisites | 58.7% |
| Short-Term Incentive | 56.0% |
| Executive Perquisites | 55.7% |
| Telemedicine | 44.0% |
| Defined Contribution Pension Plan | 41.6% |
| Discretionary Bonus | 38.2% |
| Long-Term Incentive | 33.3% |
| Defined Benefit Pension Plan | 32.7% |
| Sales/Commission Incentive | 32.4% |
| Profit-share | 30.6% |
| Deferred Profit-Sharing Plan | 15.3% |
| Other (e.g., EAP, HSA, wellness) | 8.0% |
Joseph De Dominicis, national consulting leader at TELUS Health, said organizations must consider additional compensation elements beyond base salary.
“Employers that pair fair base pay with a holistic wellbeing package — flexible health coverage, mental-health support, financial coaching, flexible work arrangements and scheduling options — will outperform in both recruitment and retention because they’re supporting the whole person through uncertainty across every sector,” De Dominicis said.
HR priorities shift toward engagement and leadership
The survey identified the top human capital initiatives for 2026:
| Initiative | Organizations (%) |
|---|---|
| Employee engagement | 49.5% |
| Building critical skills & competencies for leaders | 46.0% |
| Building current & future leadership bench | 41.3% |
| Retention | 38.7% |
| Attraction | 33.3% |
| Wellbeing initiatives | 31.1% |
| Market benchmarking to salary survey data | 30.5% |
| Implementing/reviewing salary range structure | 28.6% |
| Recruiting skilled workers | 24.4% |
| Pay equity/disparity analysis | 23.8% |
| Increasing pay transparency & communication | 20.6% |
| Increasing use of people analytics | 20.3% |
| Flexible benefit offerings | 19.7% |
| Strategies/policies for DEI integration | 19.4% |
| Incentive plan redesign | 18.7% |
| Remote work integration strategies | 17.1% |
| Neutral job evaluation system | 14.6% |
| Outsourcing | 11.1% |
| Maternity/paternity top-ups | 4.4% |
| Greater parity maternity vs paternity leave | 3.8% |
Employee engagement, building critical skills and competencies for leaders, and reinforcing the leadership bench remain among top priorities for organizations, according to TELUS Health.
Workplace structure patterns emerge
The survey reveals common workplace structure patterns across Canadian organizations:
| Standard Weekly Hours | Organizations (%) |
|---|---|
| 40 hours | 37.6% |
| 37.5 hours | 29.4% |
| 35 hours | 22.0% |
| 36.25 hours | 3.7% |
| 42 hours | 1.5% |
| 32.5 hours | 0.6% |
| Other | 5.2% |
Most organizations continue to operate on traditional full-time schedules, though variations exist across sectors and regions, the survey found.
Survey methodology and participation
The survey participants represented diverse Canadian organizations, with 39.5 per cent headquartered in Ontario and 18.0 per cent in Alberta. British Columbia accounts for 14.1 per cent of participants, while Quebec represents 16.7 per cent of the sample.
Nearly half (48.0 per cent) were privately owned organizations, while 21.8 per cent were not-for-profit entities and 15.6 per cent were publicly traded companies. Public sector organizations comprised 13.8 per cent of respondents.
The largest sector representation came from not-for-profit organizations (15.4 per cent) and finance and insurance (15.1 per cent). Professional services accounted for 8.0 per cent of participants, while industrial goods and construction each represented 5.8 per cent.
The survey has been conducted annually for 43 years, providing consistent trend data for Canadian compensation planning, according to TELUS Health. Data was collected through a secure online platform targeting HR leaders and total reward practitioners across Canada.
