Nearly 70 per cent of Canadian employers expect economic factors will have a moderate to significant impact on their compensation decisions in 2026, according to Mercer’s latest compensation planning survey.
The survey, which polled more than 500 Canadian companies in July, found employers are focusing on salary benchmarking (63 per cent) and communications of total rewards to employees (47 per cent), while the lowest area of focus was employee listening (10 per cent).
In terms of what elements of human resources are expected to increase in importance, survey respondents ranked skill and talent development, market competitiveness and compensation changes among the top responses. As for things that will become a lower priority, 16 per cent of respondents chose hiring.
Read: Nearly half of Canadian employers have a negative hiring outlook for remainder of 2025: survey
Returning to compensation planning, the survey found publicly traded companies were projecting a mean merit increase of 2.8 per cent in 2026, while privately owned and crown corporations are projecting three per cent. As for industries, high-tech and insurance/reinsurance stood out for having total rewards budget above the national average (3.2 per cent) at 3.5 per cent.
The survey also found employers are projecting they’ll promote 8.7 per cent of the employee population, on average, in 2026. This is down from the 9.8 per cent they actually promoted in 2024, which exceeded their projection in August of 2024 (7.5 per cent).
As for pay transparency, just under 60 per cent indicated they comply with laws and don’t plan to broaden transparency beyond what’s required. However, the percentage of respondents that are including pay ranges in jobs postings nationally has increased, from 16 per cent in 2024 to 20 per cent today.
This reflects that Ontario is introducing pay transparency legislation on Jan. 1, 2026, which will require ranges in job postings.
Read: What do Ontario employers need to know ahead of new pay transparency legislation?