Pre-covid salary hikes may come back next year

Aon survey projects 9.4% increment by India Inc next yr, comparable with 9.3% in 2019

Despite the second wave of Covid-19 hitting the nation hard, Indian organisations have displayed resilience in riding through the tough times, and salary increments in 2022 could touch pre- Covid levels, according to a survey.

Leading global professional services firm Aon plc's latest Salary Increase Survey in India has projected a 9.4 per cent average annual salary hike next year, as against 8.8 per cent in 2021 and 9.3 per cent in 2019. Covering 1,300 companies across 39 sectors, the survey has found that more companies are willing to give salary increments.

Talking about the findings, Roopank Chaudhary, partner in Aon’s human capital business, said that as against nearly 37 per cent of companies offering 8 to 10 per cent salary hike in 2021, the projections for 2022 stand at 43 per cent for the bracket.

Similarly, as against 20.4 per cent of companies offering a 10 per cent salary hike in 2021, the estimates for 2022 are 24.7 per cent.

On the other hand, the share of companies giving zero and 0-5 per cent increments is projected to fall to 1.1 per cent and 4.5 per cent in 2022 from 2.5 per cent and 7.3 per cent, respectively. The top three sectors with the highest salary increase projected for 2022 are technology, e-commerce, and It-enabled services. The sectors with the lowest salary increase projected for 2022 are hospitality, engineering services, and energy.

While hi-tech and IT is projected to offer an average salary hike of 11.2 per cent in 2022, followed by professional services (10.6 per cent), e-commerce (10.6), ITES (9.6 per cent), and lifesciences & pharma (9.3 per cent), sectors like cement, energy, and engineering design services may offer a 7.8-7.7 per cent increment.

According to Chaudhary, while the pandemic risk in India continues, the business sentiment and salary projections for 2022 revealed that employers were building for growth and were much better prepared than in 2020. “Most Indian organisations, across traditional and non-traditional sectors, are making investments in digital capabilities to sustain the growth momentum and disrupt their industries. Employees with digital and technological skills are the most successful in 2021, as we see the highest salary increase for employees with these skills across sectors. We expect that this trend will intensify over time, as organisations have an increased need for this talent to transform their business models and build resilient workforces,” he added.

At a time when more employers and employees are looking to return to office after the pandemic forced work from home (WFH) and remote working, the survey found Covid19 statistics and employee vaccination as key factors in determining the strategy. While 84 per cent of the respondents voted for Covid-19 statistics, 69 per cent were looking at employee vaccination. Only 46 per cent factored in employee preferences while deciding 'return to office' strategies.

Five measures being considered as part of their preparation for the third Covid wave include focusing on aggressive vaccination drives, re-evaluating plans around return to premises, relooking at talent management policies to facilitate prolonged working in a virtual environment, assessing the likely business scenarios and potential impact on rewards budgets, and investing in collaboration and productivity tools.

The survey also found a high double-digit attrition rate of overall 20 per cent, along with voluntary attrition at 15.4 per cent.

Commenting on the trends, Chaudhary said, "The pandemic has accelerated the digital journey for organisations. This led to an unprecedented war for digital talent in the short term and is driving up salary increase budgets and attrition numbers across sectors. Businesses will have to redefine their talent strategies to keep pace with the war for talent."