The new year could bring cheer to white collar professionals, if compensation trends are any indication. The increment trend for the year 2022 has been revised upwards to 9.9% against the 9.4% forecast by Aon earlier in September 2021. With this revision, India will continue to project the highest salary increases among the BRIC (Brazil, Russia, India and China) nations during the year.
Also, the number of companies going in for zero increments is expected to decrease from 1.2% in 2021 to 0.3% in 2022. The better news is that there are more number of companies which will be looking at giving increments in higher ranges. For instance, percentage of companies looking to give increments in the range of 8-10% is expected to go up from 38.6% in 2021 to 45.8% in 2022. Also, percentage of companies giving over 10% raise will be up from 27.5% to 32.3%.
The earlier projections, according to consultants, were mired by uncertainty as the country was just about coming out of the severe impact of the Delta variant of Covid-19, and companies were conservative in their projections on how resilient the economy would be. Willis Towers Watson survey on salary trends, published in October, had also projected a median increase of 9.3% in salaries in 2022, as against an increase of 8.1% in 2021.
However, as businesses have remained resilient and used learnings from the Delta wave for a better response to Omicron. Companies are optimistic about growth in 2022 despite the third wave that swept through the country last month. Nitin Sethi, partner and CEO of Aon’s human capital solutions in India, said, “Salary increases should come as a welcome break for employees amidst a volatile period. This trend is fuelled by economic recovery and the need for organisations to invest in new age capabilities to build a resilient workforce”.
Though still a tad short of the double-digit hikes seen between 2012 and 2016, the salary increases this year will be close to the average increments seen in 2016 at 10.2%. This is a marked improvement from 9.3% salary increase trend seen in 2021 and 6.1% in 2020.
Jang Bahadur Singh, senior consultant, (performance and rewards) at Aon human capital solutions in India told FE that the change in perception towards growth is what resulted in companies starting to budget for the higher salary increase numbers.
The industries with the highest projected salary increases, according to the consultancy firm will be e-commerce and venture capital with projected increments of 12.4% against 12% in 2021. This is followed by hi- tech/IT and IT enables services (ITeS) which are expected to roll out increments of about 11.6% versus 11.4% last year. With the focus on health and pharmaceuticals, the life sciences industry is expected to see a sharp increase in salary increments to 9.6% versus 8.9% in 2021.
However, according to Sethi the salary increase trend for employers could emerge as a double- edged sword as it combines the rising cost of talent with record-high attrition numbers. Data analysed for 1,500 companies across 40 countries revealed that the attrition figures in 2021 have been the highest in over two decades at 21%.
Interestingly, despite a few tough months with the second and third waves of the pandemic, India continues to project the highest salary increases among the BRIC nations in 2022, with Brazil at 5%, Russia at 6.1% and China at 6%.
Roopank Chaudhary, partner in Aon’s human capital solutions in India, said, “We believe that the fundamentals of the Indian economy remain strong and that there is a positive business sentiment. Even sectors that struggled during the first wave of the pandemic, such as retail, logistics and quick-service restaurants, have bounced back by focusing on modern trade/digital channels, which is reflected in salary increases of 8% and above. However, we do see some potential headwinds due to anticipated high inflationary pressures and the still-prevalent Covid-19 threat.”
