Wage growth slows for a third year, but few organizations consider salary freezes for 2026
Canadian organizations are planning average base salary increases of 3.3 percent in 2026, a figure that reflects ongoing pressure from inflation and housing costs, even as economic growth slows and employers adopt a more cautious approach to compensation.
Eckler’s latest compensation planning survey shows that this projected increase is slightly below the actual 3.4 percent rise in 2025, marking the third consecutive year of decelerating salary growth.
The survey reveals significant regional and sectoral differences in salary planning.
Alberta and British Columbia are set to lead with projected increases of 3.4 percent, while Saskatchewan follows at 3.3 percent.
Ontario, Manitoba, New Brunswick, Nova Scotia, and Yukon anticipate moderate increases of 3.2 percent.
Quebec, Prince Edward Island, and Northwest Territories expect below-average increases at 3.1 percent.
Newfoundland & Labrador and Nunavut are at the bottom, with projected increases of 3.0 percent and 2.3 percent, respectively.
Industry-specific projections show professional services at the top with a 3.7 percent increase, followed by agribusiness/agriculture and banking/insurance at 3.6 percent.
Sectors such as government, IT/high tech, real estate, utilities, construction, retail, manufacturing, member associations, and transportation expect increases between 3.2 percent and 3.4 percent.
Charities, foundations, and energy/oil and gas are at 3.0 percent, while education and healthcare are at 2.9 percent.
Employers are navigating a complex environment shaped by stabilizing inflation, rising unemployment, and persistent trade tensions between Canada and the US.
While the Bank of Canada is cutting interest rates to stimulate growth, only 5 percent of employers are considering salary freezes, and 29 percent remain undecided about their plans.
Anand Parsan, Principal at Eckler, notes, “Employers are signalling that while the economy has cooled, the war for talent is not quite over.”
In response, organizations are focusing on both foundational and strategic compensation practices.
Key priorities for 2026 include participating in salary benchmark surveys and updating job descriptions (45 percent each), providing compensation training and resources for people leaders (34 percent), enhancing total rewards to be more flexible and employee-centric (34 percent), and conducting pay equity analysis (32 percent).
Pay transparency and technology, including HRIS and AI, are emerging as areas to watch.
