Canadian companies are bracing for a measured approach to salary increases this year, with projections averaging around 3% for those not implementing freezes. This figure, revealed in a recent comprehensive survey, signals a subtle shift in how businesses are navigating a complex economic landscape.
The forecast represents a slight tempering of expectations from earlier predictions made last summer, which anticipated a 3.1% average increase. Experts suggest this downward adjustment reflects a continuing trend observed since 2023 – a deliberate slowing of salary budget growth.
A survey of nearly 400 Canadian businesses paints a picture of cautious optimism. While widespread freezes aren’t anticipated, organizations are adopting a deliberate, step-by-step strategy when it comes to employee compensation.
Interestingly, the vast majority – 74% – of companies surveyed are holding firm to their initial salary budget projections set last summer. This demonstrates a level of stability amidst ongoing economic uncertainty.
However, for those companies planning adjustments, the picture is divided. More than half are leaning towards reducing their initial budgets, while the remainder are considering increases, creating a mixed outlook across industries.
A significant 42% of organizations are proactively preparing to secure additional funds specifically to address potential compensation challenges. This proactive approach highlights the importance of attracting and retaining talent in a competitive market.
Despite the cautious approach to base salaries, positive economic signals are emerging. Nearly half of the surveyed companies – 47% – anticipate their annual bonus plans will fully meet or even exceed target payouts.
Looking further ahead, a substantial 35% of organizations are planning to expand their workforce in 2026. This suggests a growing confidence in future business prospects and a willingness to invest in growth.
The current environment is also driving a need for greater transparency. Companies are increasingly focused on clearly communicating the full value of employment, encompassing not just salary but the entire employee experience and total rewards package.
