'Whether it's higher turnover or a gradual drop in motivation, companies are starting to feel the effects,' says expert
With employers facing economic uncertainty, controlling overheads has become a priority — which often means deferring or scaling back salary reviews.
This, however, may not be a wise move, according to a report.
Overall, nearly half of business leaders have seen an increase in employee turnover after delaying pay rises for professionals and white-collar workers.
Additionally, 36% of respondents said that delaying pay rises has led to disengagement within their teams.
"Businesses are under immense pressure to keep costs down, and for many, salary increases just haven’t been feasible this year. In fact, 53 per cent of business leaders said budget constraints and business performance were the top reasons for delaying or reducing pay rises," says Sean Puddle, managing director at Robert Walters North America, which did the survey.
"These decisions, while understandable, are not without consequence. Whether it’s higher turnover or a gradual drop in motivation, companies are starting to feel the effects."
Despite a modest rebound in wage growth in recent years, Canada’s lowest-income households continue to fall behind, as rising living costs outpace earnings and compound affordability pressures, the Canadian Centre for Policy Alternatives (CCPA) has reported.
Salary benchmarking important
There’s also a widening disconnect between employer decisions and employee expectations, according to Robert Walters’ survey, conducted globally across May 2025, with responses from 600 business leaders and 2,200 white-collar professionals, including Canadians.
Among employees who didn’t receive a pay rise this year, 57 per cent say they are now actively looking for a new job.
Nearly three in four (72 per cent) managers would have liked to give their employees a pay rise this past January for their hard work, but 37 per cent were told by business leaders that they do not have the budget to do so, according to a previous Robert Walters report.
Even among those who did receive an increase, 65 per cent say it was lower than expected.
"There’s a clear message here: even if employees understand the business pressures, unmet expectations are still pushing them to reconsider their options. And with AI tools streamlining the job application process, employees have more opportunities than ever to explore new roles," says Puddle.
"This is where salary benchmarking and market insights become so important. Workers who haven’t seen a pay rise may be planning to discuss salary in their mid-year reviews, and employers will need market data to communicate credibly, demonstrate fairness, and manage expectations."
Sustained inflation a challenge
Sustained inflation and increasing responsibilities are driving growing demands for higher salaries, according to a separate Robert Half report.
"Many workers feel undervalued, highlighting a gap between employee expectations and current compensation levels," said Nicole Gorton, director at Robert Half. "This can be due to stagnant wages despite increased responsibilities or a perception, whether accurate or not, that their compensation lags behind industry standards for similar roles.
"Employers need to pay close attention to these sentiments and ensure they are not only offering competitive salaries that reflect the true value employees bring, but also clearly communicating what competitive compensation means for their individual employees."
