Is salary of a faculty member increased automatically year-by-year in the US and Canada?
It's a regular job, more or less like any other, and the way raises work is also the same.  When there is ample money, people get raises.  Sometimes everybody gets the same raise; other times, it's based on merit (or perceived merit, at least).  Which was it happens depend on the particular institution, the department, the recent history of raises--pretty much anything.

When you are promoted to a higher professorial rank, there is usually a prescribed step-up in salary.  It might be a fixed dollar amount or a percentage--again depending on the institution.  This is just like there is a raise associated with getting promoted at any other large employer.