India Inc is likely to give employees an average salary hike of 9.5% in 2024, marginally lower than 9.7% in 2023, according to Aon, a global professional services firm. Three in four companies are likely to give a pay increase of more than 9% this year, according to Aon’s projections based on data from 1,414 companies in about 45 industries. The slight dip in the rate of increase is due to tepid business sentiment in certain sectors such as technology consulting & services, ecommerce and retail.
Overall, manufacturing sector-led industries are projecting similar or higher salary hikes while, on the other hand, the services’ sectors are projecting lower hikes, said Roopank Chaudhary, partner and chief commercial officer for talent solutions at Aon in India. As a result, the increments are moderating this year, as is attrition.
Engineering firms and non-banking financing companies (NBFCs) are likely to give hikes of over 10%, according to Aon. This set is followed by automobiles, financial institutions, fast-moving consumer goods (FMCG), tech platforms & products, professional services and global capability centres (GCCs), where increases are seen in the 9.5-9.9% range.
Key sectors that see increases slowing include ecommerce (to 9.2% from 9.6%), retail (8.4% from 9.2%), startups (8.5% from 9%), and tech consulting & services (8.2% to 9.1%). This is reflective of the waning business sentiment across sectors like IT products and consulting, startups, ecommerce, retail, etc., Chaudhary said.
The survey shows that overall attrition rates fell to 18.7% in 2023 from 21.4% in 2020. There is a softening of attrition rates this year in addition to measured pay hikes, said Jang Bahadur Singh, director for talent solutions at Aon in India. This highlights a job market that remains competitive and one in which turnover rates may have reached their peak. A decrease in attrition is favourable for organisations, allowing them to direct resources toward improving capability and enhancing productivity, thereby creating a positive cycle. In 2023, organisations navigated a challenging environment, balancing a generous average salary increment amid high attrition rates, said Singh, as both organisations and employees maintain a wait-and-watch approach. The involuntary attrition rate for 2023 was 4%.
Salary increases in India have stabilised in the high single digits, since the high post-pandemic increments of 2022, according to Aon.
Leaders’ focus is likely to shift towards building a supportive work environment to foster employee engagement in a dynamic job market, said Singh.”
Page Source : The Economic Times
