Double-digits salary hikes are making a post-pandemic comeback on the back of a buoyant business outlook in 2023, according to global professional services firm Aon.
Aon’s latest “Salary Increase Survey in India” has not only projected a 10.4 per cent average hike across sectors for 2023, but also identified actual hikes in 2022 at 10.6 per cent as against its previous projection of 9.9 per cent in February.
The figure of 10.6 per cent is the highest since 2012, whereas the 10.4 per cent levels projected for 2023 were last seen in 2015.
Nearly half of the companies (46 per cent) surveyed are expecting to give double-digit salary increments in 2023, with 76 per cent of them anticipating a significant improvement in business outlook for the year despite headwinds.
According to Roopank Chaudhary, partner, human capital solutions, at Aon in India, several sectors are returning to the pre-pandemic era of double-digit increments.
However, while almost all sectors with global linkages are likely to take a cautious approach towards increments, those focused on domestic market and demand may see higher increments in 2023.
India is projected to post the highest salary increase among major economies such as the US, UK, China, Japan, Germany, Brazil and Singapore in 2023, said the Aon survey.
“This increase is a reflection of the confidence that corporate India has on its strong business performance.
"Business leaders, however, must take decisions that ensure their workforce remains resilient.
"They need to review their reward strategies and balance the impact of rising costs and salary pressures with a relatively high rate of attrition and the ongoing demand for critical talent,” said Chaudhary.
The survey also found that four out of the five sectors that are expected to offer the highest increments are technology related and experience the highest volatility and impact of the global economic uncertainty.
With an expected salary hike of 12.8 per cent, e-commerce leads among sectors, followed by start-ups (12.7 per cent), hi-tech/information technology and information technology-enabled services (11.3 per cent), and financial institutions (10.7 per cent).
Aon’s survey, which covered 1,300 organisations across 40 sectors, also found that the attrition rate for the first half of 2022 remained high at 20.3 per cent, only marginally lower than the 21 per cent recorded in 2021, thus retaining the pressure on salaries.
Voluntary attrition levels are expected to increase from an actual 15.7 per cent this to a projected 17.5 per cent in 2023.