Amid economic sluggishness, employees in the country have a reason to smile as a survey has predicted up to 12 per cent pay hikes in the New Year.

"India has witnessed actual average salary increase of 11 per cent in 2011 and is optimistic to see a double digit growth yet another year in 2012 at an average of 12 per cent across levels," global management consultancy Hay Group said.

The increments have been promising not only at junior or middle level but also at senior management level where 11-12 per cent salary rise is expected.

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Hay Group noted that Indian companies have shown better stability and stronger values during recession as compared to foreign entities.

Functions such as engineering, sales and marketing are seeing pick up in recruitment activities, Hay said in a statement.

The forecast for next year is based on survey of over 300 organisations in the country that analysed salary data for more than 3,20,000 employees.

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"... research this year finds that employees in India received an average 11 per cent pay rise over the last 12 months though this varies according to location and sector or seniority within an organisation," Hay Group India's managing consultant and rewards practice leader Sridhar Ganesan said.

He pointed out that companies have been aggressive in variable pay not only for senior management but also at junior levels.

"The target bonus percentage ranges between 8-44 per cent of base salary at junior management, 11-63 per cent of base salary at middle management and 15-75 per cent of base salary at senior management. Organisations have designed variable pay to induce performance driven culture," Ganesan said.

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As per the survey, 79 per cent of the participating organisations paid some form of bonus in the last 12 months.

Graduate salaries are also picking up with monthly salaries touching Rs 40,000 in job families like engineering, sales, marketing and even in support functions like finance and human resources, the statement said.

"In a short span of last 5 years, Indian employment market has witnessed a range of behaviours with employers on a hiring spree and also in right sizing mode. The market is now stabilising and maturing to next level of employer and employee relationships," Ganesan said.