More than half of Canadian employers plan to allocate average additional discretionary budget of 0.9 per cent
Canadian employers are planning salary increase budgets for 2027 that mirror this year's, despite a technical recession.
The average salary increase budget in Canada for 2026 settled at 3.1 per cent, slightly above the 3.0% organizations had initially forecast, according to Normandin Beaudry's survey of more than 350 organizations.
The early data for 2027 points to average salary increases of 3.1 per cent in Canada, excluding organizations implementing salary freezes.
Most Canadian employers also kept salary increases at 2025 levels this year.
Cautious approach to budgeting
Normandin Beaudry reported that organizations are adopting a cautious approach, pending the finalization of budgets in the fall and winter of 2027.
More than half of participating organizations plan to allocate an average additional discretionary budget of 0.9 per cent in 2027, down from 1.1 per cent in 2026 among the same proportion of respondents.
Canadian employers had previously forecast a budget increase of 0.8% in 2026, says the firm.
According to Normandin Beaudy, these additional budgets are intended to provide organizations with “the flexibility needed to meet evolving compensation needs throughout the year,” (translated), including:
- reviwing salaries according to the market
- differentiating compensation for high-performing talent
- retaining employees in strategic and essential positions
- accelerating the progression of employees who are at the bottom of the salary scale.
Canada's economy came to a virtual standstill in the first quarter of 2026, with real gross domestic product holding flat after a 0.2 per cent decline in the previous quarter, according to Statistics Canada. And falling worker financial confidence and a wave of business closures are driving down workplace performance and straining employers' ability to retain staff, according to one expert.
