Salary hike 2026: Find the average appraisal expectations by EY, top-performing sectors

Global professional services giant EY ( formerly known as Ernst & Young), in its recent EY Future of Pay report, predicted that employee salaries in India are expected to increase by 9.1% as the country focuses on robust workforce planning and worker skilling.

“Compensation trends in India continue to reflect a phase of normalisation and prudent workforce planning with overall salary increments projected at 9.1% in 2026,” said EY in its recent report.

The company said that during its research, it focuses on the compensation and attrition trends across multiple sectors, which show how employers are paying their workers.

What are the top-performing sectors?

EY report suggests that sectors such as financial services, e-commerce, and life sciences and pharmaceuticals are among the top performers, expected to record salary hikes in 2026.

“Engineering, Manufacturing, Automotive and Infrastructure sectors continue to moderate, with increments trending below prior years, reflecting cautious capex cycles, utilisation pressures and tighter margin discipline,” according to the report.

In India, the Global Capability Centres (GCCs) are set to fuel 10.4% of salary growth in the economy. The top-performing sectors, like financial services at nearly 10%, e-commerce at 9.9%, and life sciences and pharma at 9.7% are predicted to see an increase in salary this year.

Attrition rate in India Inc.

In the EY Future of Pay report, the company noted that the attrition rate in the Indian workforce has dropped by 110 basis points to 16.4% as of the end of 2025, compared to the year-ago levels.

“Attrition trends indicate a gradual normalisation in the workforce market, as overall attrition declined to16.4% in 2025 from 17.5% in 2024,” said EY in its report.

The report also highlighted that more than 80% of voluntary exits in India remain voluntary, suggesting that people are seeking opportunities rather than company restructuring-related exits.

Sectors like financial services recorded the highest attrition rate of 24%, followed by Hi-Tech and IT at 20.5%. The report also mentioned that the GCCs reported a lower attrition rate of 14.1%.

“The future of pay in India is no longer defined by the size of the annual increment alone. It is increasingly about precision – deciding which skills to invest in, which outcomes to reward, and how to balance competitiveness with sustainability,” said Abhishek Sen, partner and leader, total rewards, HR technology and learning, people consulting at EY India.

Sen also highlighted that employees working in India Inc. are now looking beyond the size of increments, as they want clarity, fairness, and consistency in how pay decisions are made in the market.

Can skills get you paid more?

The EY report also shed light on how the Indian workforce is now moving towards more skill-based roles, rather than earlier role-based jobs, with 45-50% of the surveyed organisations shifting to a skill-based pay framework.

People with skills in artificial intelligence (AI), generative AI, machine learning, and engineering can request up to a 40% premium on their salaries.

EY also said the gap between high and average performers widened, with top company talent earning 120-150% of payouts, while average performers are receiving 60-80% payouts.