Canadian employers’ 2026 salary budgets are projected to rise by an average of 3.1 per cent, down slightly from the 3.2 per cent allocated in 2025, according to a new survey by Normandin Beaudry.
The survey, which polled more than 1,000 employers, found 42 per cent plan on granting an average additional budget of 0.9 per cent for the 2026 compensation cycle, unchanged from last year. These funds are expected to be used for market adjustments (59 per cent), differentiation for high performers (58 per cent), retention of employees in strategic roles (54 per cent), progression for employees at the lower end of their pay ranges (38 per cent), addressing internal equity challenges (37 per cent), retaining employees deemed a retention risk (27 per cent) and off-cycle salary increases (20 per cent).
Read: Canadian employers increasing 2025 salary budgets by 3.4%: survey
Employers in the pharmaceutical and construction sectors are projecting the highest average budget increases at 3.8 per cent, followed by telecommunications and information technology consulting at 3.7 per cent. Other sectors anticipating above-average increases include accommodation and food services, professional, scientific and technological services and real estate, rental and leasing, which are all projecting an increase of 3.5 per cent.
“With salary increase budgets continuing to decline, organizations face growing pressure to do more with less making it essential to strategically plan salary increases to retain talent and maintain workforce strength,” said Darcy Clark, senior principal in compensation at Normandin Beaudry.
Read: Average Canadian employer increasing salary budget by 3.5% in 2026: survey