In slower labour market, employers can ‘take their foot off the gas,’ says expert – but internal equity, communication are key

As Canadian organizations brace for an economic slowdown in 2025 and 2026, HR professionals are facing a new reality: salary increases are shrinking, and compensation strategies will have to adapt.

With the OECD forecasting slower growth and rising unemployment, and recent Canadian surveys confirming that most employers are planning smaller salary increases for 2026, HR’s role in navigating this environment is critical.

Jason Foster, professor of human resources and labour relations at Athabasca University, points out that an “uncertain economic environment” is driving these trends.

“Clearly, in the last couple of quarters, the economic signs have been downward pointing. And obviously we don't quite know what the impacts of the tariffs will be and how serious things will get.”

Economic growth is slowing, he says, while inflation is down and there’s an uptick in unemployment, “which is always a bit of a lagging indicator, but I think that's also an indication that the labour market is softening.”

Factors behind salary decreases

Darcy Clark echoes Foster in highlighting factors such as the broader domestic economy in Canada, the impact of the U.S. tariffs, lower productivity numbers cited by Statistics Canada, lower inflation rates and the easing of the labour market.

“These are all obviously interconnected, but that balance of power is more...

Read Full Story: https://news.google.com/rss/articles/CBMiygFBVV95cUxOMHNMZlpZUUF6aDg5Y0lJSmJX...