Workers are likely to see softer hikes in wages in 2026, report suggests
As if there’s not enough for Canadian workers to be concerned about, they are also unlikely to get pay rises at the level seen in the last few years as organizations tighten their overall salary budgets for 2026.
The slower pace of salary growth will be influenced by international trade tensions and broader economic unease, according to the most recent Salary Projection Survey by TELUS Health, which predicts that non-unionized workers will receive an average base salary increase of 3.11% in 2026.
Although salary growth is decelerating, that projected increase still exceeds Canada’s current inflation rate of 1.9%, meaning that employees are likely to see real gains in purchasing power for the second year running.
“Three years running, we’re seeing salary projection declines - a clear signal that economic uncertainty and stabilizing inflation are fundamentally reshaping how Canadian organizations approach compensation strategy,” says Guylaine Béliveau, National Practice Leader - Compensation Consulting, TELUS Health.
Provinces show wide variation in projected pay with Manitoba expected to lead with a 3.43% rise in base salary averages, followed by New Brunswick (3.25%) and Quebec (3.21%). Saskatchewan sits at the bottom, projecting just 2.95%, the lowest among provinces with statistically significant data.
Sectors also vary from High Technology (3.64%), Oil & Gas (3.58%), and Life Sciences (3.39%) are projected to post the strongest increases, while Business Services is forecast to lag with approximately 2.60% growth.
Although increases are still being budgeted, the survey highlights more cautious compensation planning as organizations weigh trade tariffs, shifting market forces, and operational pressures.
However, salary alone won’t retain or attract talent in today’s market, so spending on innovation and productivity tools, especially AI, continues to climb, the report shows.
The share of organizations exploring AI rose from 74% to 77%. More companies report adopting AI on an enterprise level, rising from 23% last year to over 31% in 2026, rather than limiting it to certain departments.
Wellbeing, flexibility, mental health, financial coaching and supportive scheduling are increasingly viewed as essential components of compensation packages.
"Employers that pair fair base pay with a holistic wellbeing package - flexible health coverage, mental health support, financial coaching, flexible work arrangements and scheduling options - will outperform in both recruitment and retention because they're supporting the whole person through uncertainty across every sector,” says Joseph De Dominicis, national consulting leader, TELUS Health. “This holistic approach matters because employees increasingly prioritize connection, purpose, and belonging alongside traditional benefits."
