Salaries in India are expected to increase by 10.4% in 2023, compared to an actual increase of 10.6% to date in 2022, a survey by global professional services firm Aon finds. India has the highest salary increases amongst large nations in 2022, shows the Aon survey, with China at 6%, followed by Brazil at 5.6%, the US at 4.5%, the UK at 4% and Germany at 3.5%.
For India, double-digit salary hikes are back after single-digit average salary growth for five years -- 9.3% in 2021, 6.1% in 2020, 9.3% in 2019, 9.5% in 2018, and 9.3% in 2017.
The study analysed data across 1,300 companies from more than 40 industries in India.
Around 46% of organisations are expected to give double-digit salary increases in 2023, a similar proportion to 2022. The Great Resignation impact is being felt, with attrition numbers remaining near two-decade highs in 2022.
The attrition rate for the first half of 2022 was at 20.3%, only marginally lower than the 21% recorded in 2021, thus retaining the pressure on salaries. Voluntary attrition stood at 17.5% in 2022, higher than 15.7% in 2021. This trend is expected to continue for the next few months.
Roopank Chaudhary, partner of human capital solutions at Aon in India, says the increase in average salary in India is a reflection of the confidence that corporate India has in its strong business performance.
Manufacturing will see an expected average hike of 9.7% in 2023, while services will see an expected hike of 10.8%, the survey finds.
Four out of the five sectors that are expected to have the highest projected salary increase are technology-related and experience the highest volatility and impact of current global economic uncertainty. Jang Bahadur Singh, director, human capital solutions, Aon, says volatility is a key determinant of salary increases by industries – the top salary increases are in the most volatile industries.
With an expected salary increase of 12.8%, e-commerce leads sectors with the highest projected increase, followed by start-ups at 12.7%, hi-tech/IT and IT-enabled services at 11.3%, and financial institutions at 10.7%. Hospitality or restaurants, real estate or infra and cement will see the least salary hikes, shows the survey.
"Salary increases have carried forward the momentum from 2021. The evolving macroeconomic situation will decide if the double-digit increases are here to stay. With looming challenges, there is still a need for caution," says the Aon survey.
Top and senior level management will receive an average hike of 9.1% in 2023, down from 9.7% during 2022 so far. The middle management's average hike in 2023 is estimated to be 10.1%, down from 10.5% in 2022 so far. For junior management, the average hike is projected at 10.8% in 2023, down from 11.1% during 2022 so far.
The Aon survey shows 76% of the participating organisations foresee a considerable improvement in business outlook in 2023. The performance differentiation multiplier also remains high at 1.7x in 2022.
