Salary hikes to be flat at 9.2%: Survey

BENGALURU: Salary increments in India are expected to remain flat at 9.2% this year compared to a 9.3% increase last year amidst global uncertainty and softening growth, according to Aon's Annual Salary Increase and Turnover Survey 2024-25 India. The survey is based on data from more than 1,400 firms across 45 industry sectors. The report showed a consistent decline in salary increments since 2022, when many companies rolled out 10.6% hikes during the Great Resignation period as they attempted to retain staff amidst mass exodus and skills scarcity.

Wage increases are anticipated to differ among sectors, with engineering design services and automotive manufacturing leading at 10.2% hikes. Global capability centres (GCCs) and engineering manufacturing are expected to roll out 9.7% hikes this year. Above-average pay rises are expected in non-banking financial firms, retail, GCCs, and life sciences. In contrast, banking and technology consulting services are forecast to be more restrained, with expected increases of 8.8% and 7.7%, respectively.

The survey said three in five firms expected to give equal to or more than a 9% increase this year. The latest projection suggests that businesses are adjusting compensation strategies in response to evolving market conditions, including macroeconomic pressures, geopolitical developments, and the impact of AI on workforce dynamics.

"Before Covid, salary increments averaged 9.3% for years, but the pandemic was a Black Swan event that disrupted this trend. It took nearly five years for stabilisation, and while challenges like AI and trade disruptions will continue, they won’t be as impactful as Covid. Going forward, salary growth is expected to hover around 9%, potentially reaching 9.2% or even 9.1% next year," said Roopank Chaudhary, partner and rewards consulting leader for talent solutions for India at Aon. He said its data shows that moderation in salaries is an outcome given the margin pressures on companies. "The sector-wise increment trends for 2025 reflect prudence and adaptability as companies balance market challenges and the need to attract and retain talent across sectors," he said.

Aon’s analysis further suggested that while salary increments are moderating, organisations are increasingly focusing on productivity, skill-based compensation models, and AI-driven talent strategies to maintain competitiveness. It also highlighted how global factors, including US trade policies, geopolitical tensions, and technological disruptions, influence salary increments. Businesses are adapting to these evolving conditions while maintaining a strategic focus on workforce planning and compensation management.

On the business growth and hiring sentiments, the survey revealed that one out of two companies anticipated a topline growth of over 10% in the 2025 fiscal, and two out of five planned to increase the workforce by over 10%. "Almost 40% of the organisations are talking about an increase in headcount from 10% to 30%, and 57% plan to retain headcount in the range of plus or minus 10%, which says that the workforce will grow, and business growth will see hiring go up," Chaudhary added.

The study also reveals that overall attrition rates declined to 17.7% in 2024 from a high of 18.7% in 2023 and 21.4% in 2022, indicating the availability of a larger talent pool post the Great Resignation.

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