Double digit salary hikes are here to stay: Aon predicts 10.3% pay hikes for Indians in 2023

• 46% of organizations are expected to give double digit salary increases in 2023.
  
  
• The projected salary increase for 2023 is the highest for technology platforms and products (12.9%), followed by e-commerce (12.2%).
  
  
• 75% organizations foresee a considerable improvement in business outlook in 2023.
  

Even as news of layoffs are making headlines, there is some good news for Indian employees. According to the 28th Annual Salary Increase Survey by Aon, a professional services firm, salaries in India are expected to go up by 10.3% in 2023. Even though there are concerns about economic volatility, the projected salary increase continues to be in double digits, which may be in response to a high attrition rate of 21.4% in 2022. In 2022, the actual salary increase was slightly higher at 10.6%. The study analyzed data across 1,400 companies from more than 40 industries.

The projected salary increase for India is the highest among major world economies with China, US and UK having projected salary increases of 6.3%, 5.2% and 4.8%. For Brazil, it is 7.2%.

“With back-to-back double-digit increments, India Inc. continues to be bullish on talent despite fears of global macroeconomic uncertainty. Organizations are increasingly prioritizing their spends towards top performances, key talent and high potential talent,” says Pritish Gandhi, Aon Director & India Practice Leader, Executive Compensation & Governance.

When it comes to different sectors, the projected salary increase for 2023 is the highest for technology platforms and products (12.9%), followed by e-commerce (12.2%). For technology and consulting services, financial institutions and FMCG/FMCD it is 10.7%, 10.1% and 10.1%, respectively. Sectors like telecom, life sciences, transportation services/logistics and automotive/vehicle manufacturing had projected salary increases of less than 10%.

Companies also continue to give differentiated increments to key employee cohorts. While top performers got a 16.5% hike in 2022, employees with a high potential or critical skills got a 15.7% hike. Also, employees with digital skills that can be sought after by any industry that needs digital disruption got a salary increment of 15.1%.

The survey reveals that the hiring outlook for India inc. remains positive with 19% saying they have an aggressive hiring outlook while 56% say they have a normal hiring outlook. 23% have a very selective hiring outlook while 3% say they are looking at a hiring freeze. Also, 75% organizations foresee a considerable improvement in business outlook in 2023 while only 25% organizations report a negative impact of economic volatility.

The survey further reveals that while the merit increase projections (increase based on individual performance) remained steady at 7.8%, the non-merit salary increase projections (increases on top of merit increase such as market corrections, special adjustments and promotions) is expected to moderate to 2.8 percent, which is higher than the historical average. This is particularly noteworthy at junior levels where the non-merit increase/projections are as high as 3.3%.