Three key salary budget trends for 2026
If you're setting pay budgets for 2026, the latest data from 3R’s Global Salary Planning Survey provides insights from more than 200 organisations covering 40 countries.
Here's what stands out:
1. Budgets are relatively flat for most organisations
The dominant trend across 3R’s survey is that most major markets show either flat or declining budgets when comparing 2026 projections to 2025 actuals.
Western Europe, North America, and developed Asia-Pacific markets are largely holding steady, despite economic uncertainty.
Where we do see movement, it's mostly downward, a new reality for HR professionals who've relied on annual budget increases to address retention and equity challenges.
The clear message is that most organisations now believe that the exceptional pay increases of recent years, particularly as a result of the great resignation, were not a new normal.
2. Economic caution outweighs labour market fears
Economic uncertainty has become more important in shaping pay decisions. This shift represents more than just budget concerns - it's about becoming more risk-averse. We have seen organisations in the past bringing in talent at any cost but now many organisations may be prioritising financial sustainability over talent acquisition.
The implication for HR professionals is that the bar for approval has been raised considerably. During the post-pandemic talent shortage, business leaders often approved higher budgets based on market competition alone - the fear of losing talent was sufficient justification.
Now, we're seeing a return to more rigorous scrutiny, where the same market data that would have secured budget approval in 2022 may no longer be persuasive. HR professionals may need to build stronger business cases that go beyond market positioning to demonstrate impact on retention and business outcomes.
3. Stretching your budget will be the 2026 challenge
With most organisations working within similar budget constraints, success in 2026 won't come from having more to spend - it will come from spending what you have more effectively.
The challenge: you can't simply outspend competitors to secure talent. The opportunity: organisations that excel at non-financial rewards, pay transparency, building career pathways and clear communication can outperform those still trying to compete on base pay alone.
What this means for your pay strategy
These trends suggest it may be time to review our reward strategies:
- Budget allocation becomes an art form: When everyone has broadly similar percentage budgets to work with, how you distribute it determines success. This means harder decisions about who gets increases and why, requiring robust frameworks and strong manager capability.
- Pay transparency can't be postponed: With the EU Pay Transparency Directive approaching and limited budgets to address gaps, organisations need to act now. The move towards greater transparency will require addressing historical inequities and with limited budgets, a phased approach over time may be necessary.
- The skills premium persists: Whilst overall budgets are constrained, organisations are still finding ways to pay premiums for critical skills. They just have to be far more selective about which roles qualify.
- Communication becomes your differentiator: When pay increases barely keep pace with cost of living, explaining the 'why' behind pay decisions becomes critical. Think of reward as a conversation between the organisation and the employee. Like any conversation, it’s often not what you say but how you say it that has the biggest impact.
Flat budgets don't have to mean flat results. The winners in 2026 will be those who recognise that when everyone has similar resources, strategy matters more than spending. This means better allocation, clearer communication, and a broader definition of reward that goes beyond base pay.
Our complete Global Salary Planning Report 2025-26 provides the detailed analysis you need to navigate these challenges, including:
- Country-by-country budget data with quartile distributions
- Industry sector variations and trends
- Insights on pay transparency
- Insights on job architecture
The full report will be available for download later this week.
Supplied by REBA Associate Member, 3R Strategy
We help you attract and retain your people through a fair and equitable approach to pay and reward.
