Highlights from the October 2025 QuickPulse™ Compensation Planning Survey
In October 2025, 462 Canadian companies participated in the October edition of Mercer’s Canada Compensation Planning Survey about annual increase budgets, promotions, salary structure adjustments, and a variety of hot topics, including how companies are adjusting to AI.
Have you finalized your compensation plans for 2026? This is a great opportunity to see how you stack up against other Canadian companies.
Merit and total increase budgets
Almost 70% of organizations have either presented their 2026 budget recommendations to leadership for approval or have already secured approval. That is likely an indicator that the 3.0% average merit increase budget (including zero increases) and 3.3% average total increase budget is pretty close to final for 2026. This represents a slight uptick from what was predicted in July and also equals what was actually delivered in 2025 to employees.
Total increase budgets include merit increases, promotional increases, cost-of-living increases, across-the-board increases, minimum wage adjustments, off-cycle increases, etc.
Chemicals and Mining & Metals are planning higher merit budgets, with average increases at 3.5%. Services (Non-Financial), Other Non-Manufacturing, and Energy are all projecting average merit budgets at or below 3.0%.
Some industries are projecting significantly higher total increase budgets. Chemicals and High Tech are projecting average total increases of 4.0% and 3.8%, respectively, making them the highest. Banking/Financial Services and Life Sciences are also projecting total increase budgets higher than the national average.
Promotions
Organizations plan to promote just under 9% of their population in 2026, which is higher than was planned for 2025. The average pay increase that organizations report that they plan to provide for a one-level promotion is now 8.5%, down from 8.9% reported this time last year. For the organizations that do budget for promotions separately, the amount has remained consistent at around 1% of the base salary budget for promotions.
Hot topics
In addition to salary increase budgets, promotion, and salary structure questions, the Mercer QuickPulse® Compensation Planning Survey always includes questions about several topics that are presenting challenges or opportunities for employers at this point in time.
In the October 2025 edition, we asked about pay equity and transparency, AI’s influence on work, as well as the perceived economic impact.
Pay equity and transparency
A little less than one in four companies report that they are including salary ranges on job postings nationwide; 45% of companies are only including them where required by law.
With Ontario pay transparency legislation coming into effect on January 1, 2026, we asked organizations with employees in Ontario how they planned to post ranges considering the $50,000 range rule. Some of the most selected options were:
- Use the salary range minimum and add up to $50,000.
- Our salary ranges are not wider than $50,000, so we will post our full salary range.
Thirty percent of respondents admitted that they don’t know how they will develop the salary ranges that they will post for jobs in Ontario.
AI’s influence on work
While the headlines seem to be telling us that AI is having a dramatic impact on how we do work, who does the work, and even how jobs are defined, it seems that the impact might not be across the board. More than half of the participants indicated that AI is not having any impact on their hiring volume, workforce planning, or entry-level hiring practices.
As for the expected impact on overall workforce size, more than half of companies are unsure.
Economic impact
The turbulent economy is causing concern, with 53% of participants stating it will have moderate impact on compensation decisions, and another 13% reporting the impact will be significant.
Market competitiveness, skill and talent development, and compensation changes are among the most reported processes that will increase in prioritization next year due to the economic impact.
A Look ahead
Are you among the 43% of organizations that are still in the preliminary phase of setting your 2026 compensation plan? Let us give you a hand! Mercer can help with all of your compensation needs including salary surveys and policies and practices guidance. We can even help you identify your priorities for 2026 and develop a customized plan that will set you up for success in the new year.
Connect with a Mercer specialist via email at surveys@Mercer.com surveys@Mercer.com or give us a call at 855-286-5302.
About the author
Rebecca Hall, Principal
Rebecca spent much of her career working in compensation in various corporate roles then transitioning to consulting with Mercer. Her current role, as the Content Leader for imercer.com, allows her to leverage her knowledge of human resources and talent strategy to create materials supporting Mercer’s Products & Services in North America.