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The big freeze
Pay raises in Canada are stuck at 3% for a third straight year. Underneath them, more employers are leaving their pay scales out in the cold.
Raises are holding. The pay scales are sliding.
Salary increase budgets have barely moved in three years. Pay structure adjustments, which move the minimum and maximum of each pay range, dropped sharply for 2027.
Salary increase budgetsPay structure adjustments
Averages exclude organizations freezing pay. 2026 recalculated using the 2027 method; 2025 as originally published.
One in five employers is freezing every pay scale
They are still handing out individual raises. They just aren't moving the ranges those raises sit inside.
0%
of Canadian organizations are freezing all of their pay scales for 2027.
For every employer freezing salaries in at least one job category, about three are freezing pay structures. The report calls this ratio the most robust finding in the survey.
Share of organizations freezing at least one job category, Canada, 2027.
How a frozen pay scale pushes people out
Give someone a raise every year but leave the range alone, and they climb straight into the ceiling.
Year 1A raise moves the employee up the range.
Year 2Another raise. The range stays put.
Year 3They hit the top. The pay scale is frozen.
ThenThe only options left are a promotion or leaving.
"This is a cost-saving measure that comes back to haunt you later, and rarely at the right time."HUB International, 2027 Canadian Salary Forecast Report
Where raises run furthest ahead of pay scales
The bigger the gap between the raise budget and the pay scale adjustment, the more a sector is paying for raises by freezing its ranges.
+1.7Wholesale and retail trade: 3.3% raises, 1.6% pay scales
+1.2Manufacturing: 3.3% raises, 2.1% pay scales
+1.1Finance and insurance: 3.2% raises, 2.1% pay scales
-0.4Healthcare and social care: the only sector where pay scales rise faster than raises
Salary increasesPay structure adjustments
1.5%2.5%3.5%
Canadian averages excluding pay freezes.
Postcards from three provinces
Forecast salary increases for 2027, excluding pay freezes. Ontario is the most cautious of the three, and the gap is widest at the top.
British Columbia
0%Senior executives: 3.2%Ontario
0%Senior executives: 2.7%, the lowest of any categoryQuebec
0%Senior executives: 3.4%Quebec's lead over the national average barely reaches statistical significance, the report said. It is also new: Quebec trailed Canada slightly for 2026. Meanwhile, the share of Quebec employers freezing pay scales jumped to 27.6% from 16.2%.
Employers hit what they aim for
Over three fiscal years, the gap between budgeted and actual salary increases never topped 0.2 percentage points.
| Canada | Budgeted | Paid |
|---|---|---|
| 2024 | 3.3% | 3.4% |
| 2025 | 3.4% | 3.4% |
| 2026 | 3.2% | 3.4% |
Three years, three darts in the bullseye. A 3.1% budget for 2027 should mean actual increases of 3.1% to 3.3%, the report said.
Most have nothing set aside for off-cycle pay
0%have no separate budget for market adjustments, promotions or one-time catch-ups. Only 16.2% do, with a median of 1% of payroll. Another 11.2% don't know.
Without that money, market adjustments come out of the general raise budget and cut into merit pay, the report said.
AI is the hot topic. Adoption is lukewarm.
Artificial intelligence was the topic respondents most wanted to hear about. Only one organization in 20 uses it widely across HR.
25.7%
39.4%
14.9%
14.9%
5%
No plansExploringPilot projectsLimited useWidespread use
0%name data privacy and security as their top AI concern.
0%name regulatory uncertainty, even though Ontario has required AI disclosure in job postings since January 2026, the report noted.
Pay keeps people. Leadership drives output.
Biggest factor in keeping staff
Hardest to keep: technical or specialist staff (32.7%), professionals (31.0%) and front-line workers (26.1%).
Biggest obstacle to productivity
Hybrid work, often blamed in return-to-office debates, ranked last.
Same money. Better decisions.
Employers aren't being asked to spend more in 2027. The report says the real choice is where the money goes.
"Ultimately, 2027 does not require more money than 2026. It requires better decisions on where that money is allocated."HUB International, 2027 Canadian Salary Forecast Report
Source: HUB International 2027 Canadian Salary Forecast Report. Survey of 241 Canadian organizations conducted in August 2026. Quebec segment: 136 respondents with at least one employee in Quebec.
HR News Canada is an independent source of workplace news for human resources professionals, managers, and business leaders. Published by North Wall Media.
