2025 Salary Increase Budgets Moderate; 2026 Projections Indicate Further Contraction
SCOTTSDALE, Ariz., July 31, 2025 /PRNewswire/ -- A year ago, participants in WorldatWork's 2024-2025 Salary Budget Survey predicted a decline in salary increase budgets for 2025 across most of the world. Most countries indeed experienced a drop in 2025 salary increase budgets compared to 2024, often exceeding the forecast. Participants in WorldatWork's 52nd annual Salary Budget Survey project that salary increase budgets will contract further in 2026. WorldatWork, the Total Rewards association, is the leading provider of comprehensive compensation data and insights. The 2025-2026 Salary Budget Survey, covering nearly 17 million employees from 22 countries, reports detailed information about actual base salary increase and merit budgets for 2025 and projections for 2026.
After forecasting that average overall salary increase budgets would drop again this year, U.S. respondents reported that average overall salary increase budgets fell from 3.9% in 2024 to 3.7% this year. They foresee a slight additional decline in 2026 to a 3.6% average budget. In addition to contracting salary increase budgets, this year's study also revealed that in the U.S. the reported range of salary increase budget amounts is consolidating. 2025 data show fewer extreme budgets, low or high, than in recent years. And within the U.S. and Canada, geographic variation is modest.
WorldatWork's Salary Budget Survey is the longest-running survey of its kind. It is a key resource for Total Rewards and HR professionals and their C-suite partners. With year-over-year data, decision-makers can devise competitive compensation strategies and comprehensive rewards systems to help attract and retain high-caliber employees.
An easy-to-use Online Reporting Tool facilitates tailored reporting based on industry, organization size and/or geographic region (within the U.S. and Canada), helping compensation, Total Rewards, and HR professionals prepare informed salary budget recommendations for their organizations. The Online Reporting Tool allows you to better understand the complex interrelationships of geography, organization size, industry, and workforce composition to develop the best recommendations for your organization.
"The general theme here is caution," said Liz Supinski, the association's director of research and insights. "Slowing growth, persistent uncertainty, and rising geopolitical and trade tensions are leaving organizations uncertain about what's coming next. At the same time, we're seeing trends established prior to the pandemic reasserting themselves, as salary increase budgets move closer to pre-pandemic norms in most countries. Due to this, increase budgets are almost universally a bit lower than last year and predicted budgets for 2026 are the same or lower than 2025 levels." Sue Holloway, the association's compensation content director, also concurred with this assessment, "What stands out most to me is the continued, though modest, contraction of salary increase budgets in the U.S. and globally. The trend is consistent, signaling a cautious approach by employers in the face of ongoing economic and labor market uncertainty."
Report Highlights:
- Organizations continue to take action on equity. Across the U.S., Canada, the UK and India, the majority of organizations made pay adjustments to remediate pay equity issues in 2025. These adjustments may include both those required to maintain internal equity among employees as well as those needed to resolve unwarranted differences in pay between different groups of workers.
- Canadian salary increase budgets came in at lower than predicted levels in 2025. Canadian salary increase budgets averaged at 3.4%, a five-tenths percentage point decrease from 2024 and lower than the projected average. Canadian HR professionals anticipate a very similar trend in 2026 at 3.5%.
- India's increase budgets remain strong. India again shows the largest average salary increase budget in the survey, averaging 9.0% for 2025. However, this figure represents a five-tenths decrease from the projected increase for this year, and is the lowest level we've seen since 2016, with the exception of 2020's pandemic-hit results.
- UK budgets see contraction. Coming in at 3.8% in 2025, salary increase budgets in the UK fell 0.5% from 2024, and participants in the survey predict that they'll stay the same in 2026.
Methodology:
WorldatWork collected survey data for the "2025-2026 Salary Budget Survey" from March 3, 2025, to April 15, 2025. The survey was completed by 1,774 organizations, many of which reported data for multiple countries, resulting in 4,250 unique survey responses. Members were asked to respond for the U.S. and 22 other countries: Australia, Belgium, Brazil, Canada, China, France, GCC Countries, Germany, India, Italy, Japan, Mexico, Netherlands, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, the United Kingdom, the United States and Vietnam.
About WorldatWork:
WorldatWork is the leading global nonprofit association for professionals engaged in the critically important practice of Total Rewards. We serve those who are responsible for cultivating inspired, engaged, productive, and committed workers in effective and rewarding workplaces. We guide them in the design and delivery of Total Rewards programs with our membership, education, certification, idea exchange, thought leadership, knowledge creation, information sharing, research, and networking. For 70 years, WorldatWork has served Total Rewards professionals throughout the world working in organizations of all sizes and structures. Professionals from more than 93% of Fortune 500® organizations rely on WorldatWork for Total Rewards solutions.
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SOURCE WorldatWork