Canada trails US, UK in recovery, finds study
Advertised wage growth in Canada has not yet restored the purchasing power lost during the post‑pandemic inflation surge, even as some peer economies have caught up, according to new research.
Real posted wages – advertised pay adjusted for inflation – remain below their January 2021 level for new hires in Canada, finds Indeed Hiring Lab.
Using a cumulative real wage index rebased to 100 in January 2021, it places Canada at 97.5 as of January 2026. That implies a purchasing‑power shortfall of about 2.5 percentage points for new hires compared with the pre‑shock period, despite several years of nominal pay increases.
“Following the post‑pandemic inflation surge, real posted wages in the US and UK are currently around their January 2021 levels but are still lagging in Canada and Japan,” write economists Guillermo Gallacher and Pawel Adrjan, adding that “performance among euro area countries has been mixed.”
The wage flexibility analysis used Indeed job postings data from Q1 2018 to Q1 2026 across eight large economies: Australia, Canada, France, Germany, Japan, the Netherlands, the UK, and the US.
Gap no longer closing
Indeed Wage Tracker data suggest Canada’s catch‑up has stalled as nominal wage growth has slowed in line with easing inflation.
On a three‑month average basis, year‑over‑year growth in posted wages in Canada fell from 3.1% in January 2025 to 2.3% in January 2026. Over the same period, inflation has moderated such that “posted wage growth now essentially matches inflation, meaning the gap is no longer closing,” the report finds.
“Fully closing any remaining gaps will depend on whether posted wage growth continues to outpace growth in prices,” the Indeed Hiring Lab report states. “In several countries, wage growth still comfortably exceeds inflation, meaning the gap should continue to close. But in others, the margin is narrow or has disappeared entirely.”
Average salary increase budgets are projected at 3.0% for 2026, excluding salary freezes — representing a 0.1 percentage point drop from the previous survey done in the summer of 2025, according to a previous report.
Meanwhile, government workers – particularly those in Ontario and British Columbia – earned significantly higher wages and enjoyed more generous benefits than comparable private‑sector employees in 2024, according to two previous studies from the Fraser Institute.
Canada vs. US and UK
The Canadian picture contrasts with developments in the United States and United Kingdom, where the purchasing power of advertised wages has broadly recovered, according to Gallacher and Adrjan.
Indeed Hiring Lab’s index shows the US at about 101 as of January 2026 and consistently above 100 since early 2023, indicating that posted wages have largely kept pace with prices. In the UK, the index is described as “roughly even” with inflation after robust recent nominal gains narrowed a gap that opened in 2022 and 2023.
“In the UK, wage growth has exceeded inflation by 1.2 percentage points, meaning workers there continue to gain ground despite the UK having the highest inflation rate among the countries tracked,” the report notes.
By contrast, Canada’s index remains below 100 and current posted wage growth merely matches inflation, leaving earlier real‑wage erosion unaddressed.
Other advanced economies still behind
Canada is not alone in facing a lingering shortfall. Japan’s real wage index also stands at 97.5, implying a similar 2.5‑point loss in purchasing power for new hires since January 2021.
The euro area as a whole sits lower, at 96, where “cumulative inflation across the bloc has outstripped cumulative wage growth by 4 percentage points,” according to Indeed Hiring Lab. Within the bloc, the Netherlands (99.7), Germany (99.1) and Ireland (99.1) are close to full recovery, while France (98.1) and Spain (96.2) lag behind.
“Italy is the clear outlier at 89.9: posted wages there have fallen roughly 10 percentage points behind cumulative inflation, reflecting persistently weak growth in advertised pay. Full recovery is expected to take time,” the report states.
Wage flexibility and structural factors
Gallacher and Adrjan link some of the cross‑country differences in real‑wage recovery to how frequently wages are adjusted and by how much. Analysing postings from 2018 to early 2026 across eight major economies, they show that the fastest adjustments occur in the Netherlands, where “posted wages change on average once every 2.1 quarters, or roughly twice a year.” Australia, France and the UK also see relatively frequent changes.
“At the other end of the spectrum, advertised wages in Japan typically stay constant for more than a year before adjusting. The US sits in the middle, with posted wages adjusting roughly once every nine months,” they write.
“The local pace of inflation is not closely associated with the local frequency of posted wage changes across nations,” the report adds. “Instead, structural features of labor markets – including the strength of unions, employment protection laws, and wage‑setting institutions – appear to play a larger role.”
Real wage recovery has been faster in countries with more flexible labour markets, including the Netherlands and the UK, while those with more rigid wage‑setting structures, like Japan, remain further behind, the Indeed Hiring Lab report concludes.
Supporting workers’ financial well-being
One way HR professionals can better support workers’ financial wellbeing is through providing tools and education, says Adam Emanuel, Group/Life Insurance advisor at Butterfly Benefits.
“Financial wellness is no longer a niche offering. Half of Canadian employers now provide financial planning services, while 42% offer financial literacy resources,” he says in a post on the company’s website.
“With more carriers offering built-in financial planning and wealth management tools, employers are increasingly integrating these services into benefits programs to help employees make confident financial decisions.”
Nearly one-quarter (22 per cent) of Canadians – or approximately 7.3 million adult Canadians – are doing gig work due to financial necessity and cost-of-living pressures, according to a previous Securian Canada report.
