2026 Salary Increase Planning Tips

2026 Salary Increase Planning Tips
October 14, 2025 5 mins

2026 Salary Increase Planning Tips

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Global voluntary turnover remains low, shaping cautious 2026 salary budgets and prompting a renewed focus on employee development to sustain engagement. Employers are balancing cost control with strategic investments in skills, paying high performers, pay equity and total rewards.

Key Takeaways
  1. Overall salary increase budgets were lower in 2025 than organizations originally forecasted. Employers should consider if that gap should be spent on other pressing issues such as closing the pay gap ahead of the EU Pay Transparency Directive.
  2. Voluntary turnover is low across nearly every country analyzed, suggesting companies may feel they do not have to spend as much on promotions and merit increases to retain talent.
  3. With lower turnover, employers can use this opportunity to invest in areas that keep employees engaged, including wellbeing services, learning and development and reskilling for AI.

Companies around the world are experiencing low employee voluntary turnover as they plan for salary increase budgets in 2026. Data from the second edition of Aon’s Salary Increase and Turnover Study shows that organizations in many countries spent less on salary increases this year than they originally forecasted as fewer employees are leaving their jobs for new opportunities. The study was conducted in June and July 2025 and contains 1,897 participants across all industries and 115 countries.

Here are some key findings from the survey, which is part of the Radford McLagan Compensation Database, as well as tips to help clients plan their salary increase budgets and ensure their pay cycles are aligned with overall market trends in the coming year.

How Low Employee Turnover is Influencing 2026 Salary Increase Budgets

With the global economy in flux, voluntary turnover is at historically low rates across many countries. Many employees are staying put with hiring activity less robust and fewer options available to them. Turnover fell in Australia, Brazil, China, Denmark, France, India, Italy, Mexico and South Africa, but mostly by less than one percentage point. It rose in Germany and Israel and stayed flat or nearly flat in Canada, Singapore, the UK and the U.S.

54%

of U.S. companies and 56% of UK companies say they are in a normal hiring state.

Source: Aon’s Salary Increase and Turnover Study, Second Edition, 2025

Median Voluntary Turnover Across all Industries
  2025 2024
Asia-Pacific
Australia 10.4% 10.7%
China 4.6% 5.8%
India 10.1% 10.6%
Singapore 9.8% 9.8%
Europe, Middle East and Africa
Denmark 7.1% 8.6%
France 6.2% 6.9%
Germany 6.9% 6.6%
Israel 6.9% 6.3%
Italy 5.4% 5.9%
Spain 5.6% 4.9%
South Africa 7.9% 10.7%
United Arab Emirates 7.4% 7.4%
United Kingdom 9.4% 9.4%
Americas
Brazil 6.2% 6.9%
Canada 8.0% 7.9%
Mexico 9.3% 10.3%
United States 10.0% 10.1%

Source: Aon Salary Increase and Turnover Study Second Edition, 2024, 2025

Given low turnover, an uncertain economy, pressure to control rising healthcare costs along with other factors, employers are conservatively tethering 2026 global salary budgets closely to 2025 numbers or slightly above. Furthermore, last year we see many companies lowered their salary increase budgets from what they were originally planning.

“The past year has not been an aggressive environment for broad-based talent mobility. As a result, there was less pressure on off-cycle salary budgets other than key roles,” says Ephraim Edelman, a Partner in Aon’s Talent Solutions in North America. 

Median Overall Salary Increase Budgets Across All Industries
  2026 Projected Budget Actual 2025 Budget 2025 Projected Budget
Asia-Pacific
Australia 4.0% 3.6% 4.0%
China 5.0% 4.8% 5.5%
India 9.5% 9.2% 10.1%
Singapore 4.0% 4.0% 4.1%
Europe, Middle East and Africa
Denmark 3.5% 3.4% 3.8%
France 3.7% 3.5% 4.0%
Germany 4.0% 3.6% 4.0%
Israel 4.0% 3.7% 3.3%
Italy 3.8% 3.5% 3.8%
Spain 4.0% 3.5% 4.0%
South Africa 5.5% 5.5% 6.0%
United Arab Emirates 4.0% 4.0% 3.8%
United Kingdom 4.0% 4.0% 4.0%
Americas
Brazil 5.0% 4.7% 5.1%
Canada 4.0% 3.6% 4.0%
Mexico 5.2% 5.1% 5.5%
United States 4.0% 4.0% 4.0%

Aon Salary Increase and Turnover Study Second Edition, 2025, 2024

31%

of companies have adjusted their people strategy in response to recent economic volatility and half are confident their people strategy can withstand volatility or a downturn.

Source: Aon’s Economic Volatility and People Strategy Study, May 2025

Read More

How Employers Can Adjust Total Rewards Strategies for 2026

With lower employee turnover and economic uncertainty, now is an opportune time for companies to review all aspects of total rewards and evaluate the different levers they can pull to keep employees engaged.

One key focus area — given the advancement of AI — is career development and training. “Investment in employees’ skillset is never lost. Hopefully you retain those people you invest in, but even if they leave, you’ll be reducing their anxiety and improving their prospects for longer-term employment in-house or externally,” says Kate Evert, Partner in the Workforce Transformation team in Aon’s Talent Solutions practice in North America. “This can enhance employee engagement and productivity,” she adds.

75%

of organizations now have roles requiring AI skills, yet just 31 percent have effectively implemented company-wide AI strategies.

Source: Aon’s 2024 Artificial Intelligence Study

Given the confines of rewards budgets that are already constrained by rising healthcare costs, an uncertain economy and other factors, focusing on skills development is a no-brainer, says Adithi Jagannathan, Head of Employee Rewards for Talent Solutions in the United Kingdom. “It’s a win-win for employers and employees to invest in learning and development right now: Companies need these skills, employees are asking for them and the financial investment can be relatively low compared to other elements of total rewards,” she says.

Aon publishes its Salary Increase and Turnover Study twice per year, with distinct reports for the U.S. and global practices. Learn more about participating or purchasing the latest study.

Aon publishes its Salary Increase and Turnover Study twice per year, with distinct reports for the U.S. and global practices. Learn more about participating or purchasing the latest study.

Learn More
Aon’s Thought Leaders
  • Ephraim Edelman
    Partner and Head of Data Solutions, Talent Solutions, North America
  • Kate Evert
    Partner of Workforce Transformation, Talent Solutions, North America
  • Adithi Jagannathan
    Head of Employee Rewards, Talent Solutions, United Kingdom
  • Julie Mills
    Associate Partner, Talent Solutions, North America
  • Maggie You
    Head of People Advisory, Talent Solutions, Asia Pacific

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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