Canadian employers are planning average base salary increases of 3.3% in 2026, a slight decline from the 3.4% increase granted in 2025, according to a new survey by Eckler. The projection signals a more cautious approach to compensation as organizations navigate economic uncertainty and stabilizing inflation.
The survey of more than 500 Canadian organizations, conducted between July and August 2025, marks the third consecutive year of slowing salary growth across the country. Only 5% of employers are considering salary freezes, while 29% remain undecided on their 2026 compensation plans.
“Employers are signalling that while the economy has cooled, the war for talent is not quite over,” said Anand Parsan, principal at Eckler. “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 Bank of Canada has been cutting interest rates to ease borrowing costs and stimulate growth, but rising unemployment and ongoing uncertainty are keeping employers conservative with their budgets. At the same time, soaring housing costs and persistent inflation continue to put upward pressure on wages.
Regional variations
Western provinces are leading in wage growth, while Atlantic provinces, Quebec, and northern territories are lagging behind. Alberta and British Columbia top the list with projected increases of 3.4%, followed by Saskatchewan at 3.3%.
Ontario, Manitoba, New Brunswick, Nova Scotia, and Yukon are planning moderate increases of 3.2%. Quebec, Prince Edward Island, and Northwest Territories are projecting increases below the national weighted average at 3.1%.
Newfoundland and Labrador sits at 3.0%, while Nunavut shows the lowest projected increase at 2.3%.
Industry differences
Salary increases vary widely by sector, ranging from 2.9% to 3.7%. Professional services leads at 3.7%, followed by agribusiness/agriculture and banking/insurance at 3.6%.
Government, IT/high tech, real estate, utilities, construction, retail, manufacturing, member associations, and transportation are projecting increases between 3.2% and 3.4%.
The lowest increases are planned for charities and foundations, and energy/oil and gas at 3.0%. Education and healthcare organizations are projecting 2.9% increases.
HR priorities
Canadian organizations are focusing on foundational compensation practices alongside strategic enhancements for 2026, according to the survey. The top priority is participating in salary benchmark surveys, cited by 45% of respondents.
An equal 45% are planning to update job descriptions, while 34% will provide compensation training and resources for people leaders. Another 34% are enhancing total rewards to be more flexible and employee-focused.
Conducting pay equity analysis ranked fifth at 32%. Pay transparency and technology, including HRIS and AI, are emerging as areas to watch.
The survey defines total base salary budget to include merit increases, cost-of-living increases, across-the-board increases, minimum wage adjustments, market adjustments, equity adjustments, and off-cycle increases, but excludes promotional increases.
