Amid a blooming positive business sentiment in India after the devastating second wave of the COVID-19 pandemic, average salary hikes are expected to reach their highest levels since 2016, according to a survey.
As per Aon India’s 26th Annual Salary Increase Survey 2022, annual salary increments in India could reach a five-year high of 9.9 percent this year. The survey analysed data from over 1,500 organisations spread across 40 sectors; it also studied the Indian business outlook with salary increase numbers and attrition trends.
According to the survey, India is expecting a 9.9 percent bump, which is the highest increase in salaries amongst BRIC nations --Russia is at 6.1 percent, China is at 6 percent, and the US is at 3.6 percent.
About 88 percent of the organisations in India foresee an improvement in business in 2022. This is 11 percent higher than in 2021.
In 2022, about 45.8 percent of companies are set to offer 8-10 percent increment, followed by 32.3 percent offering a 10+ percent hike. This number has come up from 38.6 percent and 27.5 percent, respectively, in 2020.
Sectors with the highest projected salary increase in 2022 are e-commerce with 12.4 percent, high-tech/information technology at 11.6 percent, and professional services at 10.9 percent, while sectors with the lowest expected salary increase are metals/mining, QSR/restaurants, and cement.
“Salary increases should come as a welcome break for employees amidst a volatile period. For employers, it could emerge as a double-edged sword when you combine the rising cost of talent with record-high attrition numbers. This trend is fuelled by economic recovery and the need for organisations to invest in new-age capabilities to build a resilient workforce” said Nitin Sethi, partner, and CEO of Aon’s Human Capital Solutions, India.
The growth of salary increment can also be attributed to the correction of freezing of salaries in 2020 and 2021. The findings of the survey indicate that organisations turned to a socialistic approach by balancing rewards for top performers and average performers in 2021. A 1.7x rise in performance rating was given to the employees that 'far exceeded expectations', and a 1.5x increase for employees who 'often exceeded expectations'.
The survey also suggests that the war for talent has been about acquiring digital skillsets across sectors. The current supply is struggling to meet the demand for talent. This will increase costs for companies and attrition rates may go higher. To combat this, organizations can look into providing permanent remote working solutions to employees, gig workers and campus hirings along with a greater focus on inclusivity and diversity.
