While there is a strong variation across companies in India, a major chunk of companies is expected to award their employees a 9-12% hike this year. India Inc is projected to hand out a lower average annual salary hike of 9.5% in 2024 compared to 9.7 percent in 2023 amid cooling attrition and global demand-dependent sectors such as technology facing headwinds, according to Aon’s Annual Salary Increase and Turnover Survey, which was unveiled on Wednesday.
Although lower than last year, India is still the leader among APAC nations with a 9.5% hike. Besides, finer data shows salary increase adjusted for inflation has risen to a healthy 5%. The number also marks a return to the levels witnessed in the pre-pandemic years of 2018 and 2019.
While there is a strong variation across companies in India, a major chunk of companies is expected to award their employees a 9-12% hike this year.
Sector-wise, manufacturing shines the brightest with its projection of 10.1% hike, while financial institutions (9.9%), Global Capability Centres (9.8%), Chemical (9.7%) and Professional Services (9.7%) are also expected to hand out healthy hikes.
On the other hand, Technology Platform and Products (9.5%) and Technology Consulting and Services (8.2%) come in lower.
But seen in comparison with last year, domestic- and manufacturing-demand industries are witnessing salary levels going up or staying flat, while the global recession is impacting IT and financial services.
Within the organisation pyramid, the junior management is set to take home the highest hikes of 9.9% like last year, while middle management and top & senior management close in at 9.4% and 9.1%, respectively. However, the top management also get compensated in other cash and non-cash options.
Roopank Chaudhary, partner and chief commercial officer for Talent Solutions at Aon in India, said, “The projected increase in salaries in the Indian formal sector indicates a strategic adjustment in response to the evolving economic landscape. Despite a conservative global sentiment, industries such as infrastructure and manufacturing continue to project robust growth, indicating the need for targeted investments in certain sectors.”
Overall attrition in India has also fallen to 18.7% in 2023 compared to 21.4% in 2022 – going back to levels last seen in 2013 – underscoring a softening talent demand. This highlights a job market that remains competitive and that turnover rates may have reached their peak. A decrease in attrition is favorable for organizations allowing them to direct resources towards improving capability and enhancing productivity, thereby creating a positive cycle. Interestingly, involuntary attrition fell from 4.4% in 2022 to 4% in 2023 – indicating that layoffs have largely been happening outside India.
Jang Bahadur Singh, director for Talent Solutions at Aon in India, said, “In 2023, organizations’ navigated a challenging environment, balancing a generous average salary increment amidst high attrition rates. As leaders prepare for 2024, their focus is likely to shift towards building a supportive work environment to foster employee engagement in a dynamic job market.”
The study analysed data across 1414 companies from almost 45 industries.