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Indian cos are projected to offer 9.3% salary hike in ’22

Increased business optimism is clearly translating into higher salary budgets and increased hiring activity, the report said. (Photo: Mint)Premium
Increased business optimism is clearly translating into higher salary budgets and increased hiring activity, the report said. (Photo: Mint)

As against India, Asian peer China is projected to pay 6% hike, Singapore and Australian firms may offer around 3.8% increment and Vietnam is projected to offer 8% hike to employees, indicating a bright domestic economic outlook

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NEW DELHI : Indian companies are likely to offer pay hikes of an average 9.3% in 2022, the highest in the Asia-Pacific region, amid high attrition rates and optimism over improved business outlook over the next year, advisory and consultancy Willis Towers Watson said on Wednesday.

In comparison, Chinese firms are projected to pay a 6% increase, Singapore and Australian firms around 3.8% and Vietnam an 8% increase to employees, indicating a bright domestic economic outlook in these countries.

The latest forecast is almost similar to the 9.4% pay hike by Indian companies projected in an Aon salary survey in September. The Willis Towers Watson salary budget planning report said IT, retail and pharma sectors are likely to be the leading paymasters next year.

The pay hike in 2022 will be more than the 8% hike given in 2021 as companies “recover from the economic fallout of the pandemic and face mounting challenges attracting and retaining employees... As a large emerging market, India continues to project the highest salary increase for 2021 in the Asia Pacific", said the report that collected data from 1,405 firms from the region, including 435 from India.

Pointing towards a much-anticipated economic recovery, 52.2% of firms in India projected a positive business revenue outlook for the next year, up from 37% in the Dece-mber quarter. This is expected to translate into increased hiring across businesses with 30% of firms planning to hire during the period, an almost threefold jump from last year.

The survey showed that a large part of hiring is likely to happen within critical functions such as engineering (57.5%), IT (53.4%), technically skilled trades (34.2%), sales (37%) and finance (11.6%), and these jobs will command a higher salary.

“Increased business optimism is clearly translating into higher salary budgets and increased hiring activity. The pandemic was a watershed moment in the way organizations plan their people spend. While talent attraction and retention remain a challenge, the core employee value proposition will now need to go beyond just competitive salaries, and increasingly focus on a wider range of benefits, wellness, upskilling and the overall employee experience," said Rajul Mathur, consulting leader (India), talent and rewards at Willis Towers Watson.

“With low salary increments last year, organizations have leaned towards a broader distribution of variable pay across employee segments by role, seniority and performance levels this year," added Mathur.

The survey said the high-tech sector is expected to see the highest salary increase at 9.9% in 2022, followed by consumer products and retail at 9.5%, manufacturing at 9.3%, while financial services and pharma sectors are set to offer similar increases of 9% each.

In terms of proportionate increase over last year, the high-tech sector again topped with a projection of almost 1.9 percentage point increase from 2021. On the other hand, the energy sector ranked among the lowest actual salary hikes in 2021 at 7.7%. The projected salary of the energy sector in 2022 is also the lowest at 7.9%, Mathur explained.

“A combination of the prevailing macro-economic environment, typical business cycle and the lingering business impact from the pandemic have adversely affected the energy sector the most. That said, the salary increments for the renewable sector can be expected to be comparatively higher," the report added.

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