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Canadian Tech: Balancing Compensation and Benefits in a Slowing Market
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Canadian Tech: Balancing Compensation and Benefits in a Slowing Market
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Canadian Tech: Balancing Compensation and Benefits in a Slowing Market
In 2025, Canadian tech organizations reported a median salary increase of just 3.5% year-over-year, marking the second consecutive year of slowing salary growth in the sector. This is a significant decline from the 7.5% increase observed in 2023. Despite this, the increase still outpaces Canada's overall inflation rate of 1.9%. However, the growth is not keeping up with the rising costs of essential items like groceries and shelter, which have inflated by 3.5% and 2.6% respectively.
The report, produced in partnership with Mercer, draws on data from startups, scaleups, and large multinational corporations across various tech subsectors, including software, AI, cleantech, hardware, visual effects, animation, video games, and interactive digital media.
Key Takeaways:
Slowing Salary Growth: The median salary increase of 3.5% in 2025 is a decline from 3.8% in 2024 and 7.5% in 2023, indicating a trend of slowing salary growth in the Canadian tech sector.
Sector-Specific Variations: The FinTech and hardware sectors reported higher median salary increases at 5.8% and 5.0%, respectively, compared to the overall median.
Turnover Rates: Employee turnover has continued its decline from a peak of 13% three years ago to 8% this year, suggesting improved retention within the sector.
Forecast for 2026: Canadian tech organizations forecast an average headcount growth of 13% and salary increase budgets of 3.6% for 2026, indicating cautious optimism for the upcoming year.
Work Arrangements: Over 71% of companies have hybrid work arrangements, with about 26% fully remote and just 2.6% fully on-site, reflecting the industry's adaptation to flexible work models.
Why It Matters:
The slowing salary growth in the Canadian tech sector may reflect a broader trend of market stabilization after years of rapid expansion. While the increase still outpaces inflation, it highlights the need for organizations to balance competitive compensation with meaningful benefits and flexible work arrangements to attract and retain talent. The forecasted headcount growth and salary increase budgets for 2026 suggest that companies are cautiously planning for the future, aiming for sustainable growth and stability.
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