2022 salaries: Silver lining & concern
GIVEN HOW THE ECONOMY is heading back to recovery, salaries are expected to increase as well.
However, Aon’s 26th annual survey of Indian industries shows that white-collar workers may do much better in the coming year. Salary increments for employees in 38 sectors are expected to be 9.4 per cent in 2022, higher than the 2019 raise that India Inc employees received (chart 1).
While India is still to breach the double-digit increment figure — between 2011 and 2016, salaries were growing higher than 10 per cent — the business outlook is rapidly improving. In all, 61.9 per cent of participants in the Aon survey were optimistic about the coming year, as against 45.5 per cent in 2021. Only 11.9 per cent held a negative outlook, down from a third of businesses this year (chart 2).
However, data indicates significant sector-wise variations. IT, professional services and e-commerce are expected to witness double-digit growth in salaries in the coming year. In contrast, salaries in energy, cement and engineering design would grow less than 8 per cent (chart 3).
Besides salary growth, the other silver lining is the pick-up in hiring. The Naukri Jobspeak index scaled another high in August 2021, increasing 89 per cent over the last year. The index was 24 per cent higher than the 2019 value (chart 4). A Teamlease report earlier this year had indicated a pick-up in hiring activity and higher salary increments. The report had also highlighted that those with specialised skills would receive better remuneration.
With salary and hiring trends showing an uptick, consumer spending is also expected to rise. In its latest report, Fitch has pared down the household spending forecast for 2021 but has projected spending to increase to ~77.7 trillion in 2022 — higher than the 2019 pre-pandemic level of ~73.5 trillion (chart 5).
But there are risks to household spending as data indicates that the informal economy has been dealt a considerable blow. The other significant risk is a possible third wave of Covid-19 infections, as witnessed in the US and Israel. India still has a lot of ground to cover, since only 12.48 per cent of the country’s population is fully vaccinated. In contrast, China has vaccinated 67.15 per cent of its population and Brazil, a third.