Salary planning has never been easy, but the 2026 cycle has thrown some curveballs.
Sure, inflation has slowed, but prices haven’t gone down, and your employees continue to experience sky-high housing rates and record grocery prices. Inflation may have cooled, but the reality on the ground—not so much.
Hiring has shifted, too. Certain sectors are finally finding their footing, while others are still bleeding talent with no real end in sight. So, when it comes to determining how much salaries actually need to move this year, the pressure on HR teams hasn’t let up. The mandate—be competitive without blowing up the budget.
The Big Picture: Salary Increases Stabilized at Around 3%
Let’s start with the headline: most Canadian organizations we’re seeing are landing on roughly 3% for 2026. After a few years of larger-than-usual adjustments, that stabilization is showing up consistently across most industries nationwide.
Ontario employers are tracking right alongside this. The majority are sitting in the low 3% range—a deliberate step back from the bigger bumps that defined 2021 to 2023, when the labour market was at its tightest, and even into 2024. Our data, collected in late 2025, shows employers were projecting average increases of 3.1% for salaried employees, 3.0% for hourly-paid employees, and 3.3% for executive roles. (These averages exclude organizations reporting compensation freezes, which accounted for 4% or less of respondents, depending on the report.)
For many organizations, this is a healthier place to be. We’re returning to something closer to long-term historical norms—sustainable increases rather than reactive ones. 3% is where the market is. Not a stretch, not a concession. Just where things are.
Main Drivers of Salary Decisions in 2026
When you talk to Ontario employers about how they’re setting pay this year, two themes keep coming up: the relentless pressure of cost of living, and the ongoing challenge of attracting and keeping people in those critical, in-demand roles.
Inflation Is Still Influencing Expectations
Yes, inflation has eased. But the past few years left a mark. Housing costs spiked. Food got expensive. Commuting costs more. Those experiences don’t disappear from someone’s frame of reference just because CPI comes down a point or two.
What that means practically is that a lot of workers are still benchmarking their pay against what happened, not what economists are saying now. That’s a gap HR leaders must manage carefully — staying within budget while also making people feel like their compensation reflects something real.
Certain Roles are Still a Fight to Fill
If you work in manufacturing, skilled trades, or any technical field, you already know the shortages persist. The labour crunch in those areas didn’t vanish—it’s just stopped making headlines.
What’s working for some organizations is getting surgical about it. Instead of spreading a 3% budget evenly across everyone, they’re concentrating higher increases on the roles that are hardest to fill or most critical to the business and keeping it more modest elsewhere. You protect the budget. You stay competitive where it really counts.
What’s Taking Shape Across Ontario
A few clear patterns have emerged as organizations locked in their 2026 compensation plans.
After several years of reactive compensation decisions, employers are finally settling into a more stable planning rhythm. That consistency makes it easier to plan—and easier to communicate to leadership and employees alike.
Blanket increases are losing favour. The flat percentage applied to everyone is a harder sell when your compensation challenges aren’t evenly distributed. More organizations are differentiating higher bumps for top performers, niche skills, and for roles under market pressure. The data in our 2026 reports backs up this growing trend. We saw significant wage increases in many skilled trade and technical positions compared to previous years.
Internal equity is getting real scrutiny. Pay transparency has changed the game. Employees talk. Candidates compare. Organizations that can’t back up their pay decisions with a coherent structure are going to have a harder time, both retaining people and hiring them. That’s pushing HR teams toward more rigorous benchmarking and cleaner salary bands.
What’s Worth Prioritizing Now
Review your salary structures — even if increases are modest.
Market rates for specific roles keep shifting whether you look at them or not, especially in technical and trades positions. A structure that held up last year might already have meaningful gaps.
Watch your high-pressure roles separately.
The 3% average can mask significant variation. The roles where you’re struggling to hire or retain may need to be treated as their own conversation—one that sits outside the general increase budget.
Make sure your data can back you up.
Pay transparency means compensation decisions are under greater pressure and visibility than they used to be. Employees, candidates, executives—everyone has an opinion now. Peer-based compensation data has become essential because it gives you the grounding to make confident calls and explain them clearly.
The Bottom Line
Ontario’s salary picture for 2026 is steady. Most employers are landing in a similar place at around 3%, and the labour market is calmer but still competitive—particularly in the sectors where it’s always been tough.
What’s important to understand in 2026 is that the real work in effective compensation isn’t settling on a number. It’s about ensuring that the number is backed by solid market data, tied to a pay structure that actually holds up, and targeted to the roles and people who matter most to the business.
When you combine Ontario’s pay transparency requirements with a generation of workers who openly discuss what they earn, compensation decisions are under a level of scrutiny that simply didn’t exist a few years ago. Getting pay right—consistently, defensibly, fairly—is how you show people they belong where they are.
And this is where having reliable, Ontario-specific data is critical. Clarity—our new online platform—makes this easier by providing on-demand peer-driven data. Filter by company size, region, industry, union status, or annual revenues, and get exactly the benchmark you need, when you need it. We have been conducting Ontario compensation and benefits surveys for decades, producing the kind of local, specific data that national surveys can’t replicate.