Salaries in India are expected to increase by 10.3 per cent in 2023, compared to an actual increase of 10.6 per cent in 2022, reveals new survey by global professional services firm Aon plc.
Although slightly lower than last year, the projected increase continues to be in the double digits despite concerns about economic volatility, which may be in response to attrition rates.
According to the 28th Annual Salary Increase Survey in India, at 21.4 per cent, the attrition rate in India for 2022 remained high – a consequence of an ever-changing talent strategy and the ongoing gap between supply and demand of talent.
Roopank Chaudhary, partner, Human Capital Solutions, India at Aon, said rising economic uncertainty and concerns over economic volatility are making salary increase planning especially difficult this year. India Inc. has awarded aggressive salary increases over the last two years, which has some companies grappling with higher wage bills.
“Globally connected industries, such as technology platform and products, are somewhat cautious in their salary budgets while industries driven by domestic demand, such as manufacturing or FMCG/FMCD, are bullish on their budget planning as compared to their five-year averages. Forward-looking organsations are therefore contextualixing salary increase planning with data-driven analysis and the unique circumstances of their own industry and organisation to maintain their workforce resilience and make more-informed decisions,” he added.
The survey further reveals that while the merit increase projections that is increase based on individual performance stays steady at 7.8 per cent, the non-merit salary increase projections that is increases on top of merit increase such as market corrections, special adjustments and promotions is expected to moderate to 2.8 per cent, which is higher than the historical average.
This is particularly noteworthy at junior levels where the non-merit increase projections are as high as 3.3 percent.
Pritish Gandhi, director and leader of the Executive Compensation and Governance Practice in India at Aon, said the non-merit salary increase projections continue to be moving up as firms budget for retaining talent through promotions and off-cycle corrections.
“As companies look to differentiate and optimise their talent spend, employers are investing more for critical talent in key roles. While it is important for businesses to define and adapt pay increases for both merit and non-merit factors, organisations must take a strategic approach to total rewards to build a resilient workforce and shape their strategies towards long-term drivers of pay and performance.”
The study, the largest and most comprehensive rewards survey in India, analysed data across 1,400 companies from more than 40 industries.