Many Canadian workers will be getting a pay raise next year, but it’s probably best not to get your hopes up.
Insurance and risk management company Gallagher released its 2025/2026 Salary Planning Survey for non-unionized employees on Thursday, and overall, the forecast does not look promising. However, workers in certain sectors will receive a larger pay raise than those in other sectors.
“With forecasts of an economic slowdown in 2025 and 2026 from organizations such as the Organization for Economic Co-operation and Development (OECD), Canadian employers are navigating a challenging landscape of tighter budgets, slower growth, and rising unemployment,” reads the report.
According to Gallagher’s findings, nearly two-thirds of organizations that participated in the survey indicated that the increases planned for 2026 will be lower than the increases in 2025.
The main factors influencing this budget decision include affordability, position to market, and cost of living.
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“While attraction and retention challenges remain relevant HR challenges, their priority to Canadian employers continues to decline,” stated the insurance company.
Attraction and retention priorities have declined from 62 per cent in 2024 to 54 per cent in 2025 and 50 per cent in 2026.
The survey forecasts an expected average salary increase of 3.1 per cent, excluding freezes in 2026, down from 3.5 per cent in 2025 and 3.8 per cent in 2024.
According to Gallagher, the sectors with the most generous projected salary increases include legal services (3.7 per cent), real estate (3.5 per cent), and professional services (3.4 per cent).
Sectors expecting smaller increases include educational services (2.9 per cent), municipalities (2.9 per cent), and foundations (2.7 per cent).
Forecasted raises across the country range from 2.9 per cent to 3.2 per cent for 2026. The national average is 3.1 per cent. Quebec has the highest actual (3.4 per cent) and forecasted (3.2 per cent) salary increase.
2025 pay raise projections vs. 2026
Comparing this forecast to Ranstad Canada’s 2025 projection is pretty depressing. Several fields were expected to see salary increases of between eight and 12 per cent.
Gallagher’s survey also found that 32 per cent of organizations have confirmed additional budget dedicated to managing special cases addressing high-potential, at-risk or fast-tracking employees.
“Coupled with eight per cent of organizations who are planning salary freezes, and a declining priority on attraction and retention, could mean that organizations are feeling less pressure from a compensation perspective. Alternatively, they may consider their structure to be sufficiently competitive,” reads the report.
While organizations may not have the budget to give significant pay raises, Gallagher found that non-monetary programs are still being leveraged by 30 per cent of employers to differentiate themselves from the competition. This includes benefits such as training, mentoring, development, special projects, and career management programs.
“These programs are, however, also seeing a decline in usage compared to 2024 and 2025 (44 per cent in 2024 and 42 per cent in 2025),” reported the insurance company.
Signing or hiring bonuses, as well as off-scale salaries, are still present in 30 per cent of organizations, the survey added.
Not too pleased with these pay prospects? It might be time to explore what else is available. Check out 10 companies that are always hiring for remote jobs in Canada.