Salaries may rise an average 9.4% next year: Survey
Indian employees may get an average pay hike of 9.4% in 2022, a survey found, amid optimism about an economic revival and a stiff competition for talent.
The projected increment is the highest since 2018 when the average raise was 9.5%, consulting firm Aon said in its India Salary Increase Survey of nearly 1,350 firms. After seven years of double-digit pay hikes, average increment figures in India fell to 9.3% in 2017, followed by 9.5%, 9.3%, 6.1% and 8.8% in subsequent years.
The survey said the pandemic accelerated the digital journey for organizations, triggering an unprecedented war for digital talent and boosting salary budgets. As a result, Indian companies reported a five-year-high attrition rate of 20% in 2021, sharply up from 12.8% the previous year.
According to the Aon survey, the 2022 pay hike of 9.4% indicates robust economic recovery, improved consumer sentiment, and a brewing talent war. It said 2021 witnessed high demand for key skills, pushing the actual salary hike to 8.8% as against a projection of 7.7%, as the economy gradually opened up, and the companies became resilient to deal with the second wave and manage growth. It also said companies indicated their desire to pay performers 1.7 times the average pay hike in their organizations.
The technology sector continues to be the best paymaster, with an average hike of 11.2% in 2022 against 10.5% in the previous year, followed by professional services and e-commerce firms, which are expected to give a 10.6% pay raise against 10.1% in the previous cycle. Similarly, ITes, life sciences and pharma and consumer goods sectors are set to offer 9.2-9.6% pay hikes.
Even the 2021 laggards like real estate and infrastructure are expected to pay an 8.8% hike against 6.2% in 2021. Similarly, the hospitality and restaurant sector, battered by the pandemic in the past 18 months, is slated to offer a 7.9% hike. Energy and engineering design services will offer (7.7%) the lowest pay hikes among key sectors, according to the survey. It said the energy sector will see a decline in staff pay increment of 7.7% in 2022 as against 8.2% earlier.
Roopank Chaudhary, a partner at Aon’s human capital business, said, “Despite another wave of covid-19 hitting the nation, Indian organizations have displayed resilience in riding through the tough times. While pandemic risk in India continues, the business sentiment and salary projections for 2022 tell us that employers are building for growth and are much better prepared than in 2020."
“There is positive sentiment across sectors, and India Inc. is firmly on the path to recovery, with most firms projecting salary increases back to FY19 levels by FY22. Third wave or not, businesses continue to power through with strong momentum in mindset and preparedness," said Jang Bahadur Singh, a senior consultant (performance and rewards) at the firm.
“High double-digit attrition is the strongest we have seen in more than a decade. The war for talent is back in India, which we anticipate will keep salary increases high," said Nitin Sethi, partner and chief executive of Aon’s performance and rewards businesses in India.
“While 2021 is a year where certain sectors remain under stress due to the covid-19 pandemic, most businesses have an optimistic view going into 2022 and are projecting higher salary increases. We see positive sentiment across most sectors, high investor confidence with sustained foreign direct investment flowing into the country and growing consumer demand across most segments," Sethi said.