According to a recent report by global professional services firm Aon, salaries in India are projected to increase by 10.3% in 2023, slightly lower than the actual increase of 10.6% in 2022. Despite concerns about economic volatility, the projected increase remains in double digits, which may be due to high attrition rates, which remained at 21.4% for 2022.
The report also revealed that merit-based salary increases are expected to remain steady at 7.8%, while non-merit increases, which include market corrections and promotions, are projected to moderate to 2.8%. It's worth noting that non-merit increases at junior levels could be as high as 3.3%. The report analysed data from 1,400 companies across 40 industries.
E-commerce and professional services are projected to have the highest salary increases at 12.2% and 11.2%, respectively. On the other hand, retail and life sciences have the lowest projected salary increases at 9.7%, while other services have a projected increase of 9.6%.
While rising economic uncertainty and concerns about economic volatility make salary increase planning challenging this year, India Inc. has awarded aggressive salary increases over the last two years, causing some companies to struggle with higher wage bills. Globally connected industries, such as technology platforms and products, are cautious in their salary budgets, while industries driven by domestic demand, such as manufacturing or FMCG/FMCD, are bullish on their budget planning compared to their five-year averages.
In summary, the projected increase in salaries for 2023 in India is 10.3%, with e-commerce and professional services offering the highest salary increases. While there are concerns about economic volatility, salaries remain in double digits, and non-merit increases at junior levels could be as high as 3.3%.
15 Key Terms You Need to Know About Salary Increases and Economic Volatility
Salary increases: Refers to the rise in the amount of money paid to employees for their work.
Merit-based salary increases: Refers to an increase in salary based on individual performance, skills, and achievements.
Non-merit salary increases: Refers to an increase in salary based on factors other than individual performance, such as market corrections, special adjustments, and promotions.
Market corrections: Refers to a change in the price or value of a particular good or service due to changes in supply and demand, economic conditions, or other factors.
Attrition rates: Refers to the rate at which employees leave a company, typically due to resignation, retirement, or other reasons.
Economic volatility: Refers to the instability or unpredictability of economic conditions, which can have an impact on factors such as employment, income, and consumer spending.
E-commerce: Refers to the buying and selling of goods and services online.
Professional services: Refers to specialized services offered by professionals such as lawyers, accountants, and consultants.
Retail: Refers to the sale of goods directly to consumers.
Life sciences: Refers to the study of living organisms and their functions, including fields such as biology, medicine, and pharmacology.
Other services: Refers to a range of services not covered by the other categories, such as hospitality, transportation, and education.
Wage bills: Refers to the total amount of money paid by a company to its employees in wages and salaries.
Budget planning: Refers to the process of creating a plan for how to allocate resources, including funds, to meet specific goals and objectives.
Manufacturing: Refers to the process of producing goods on a large scale using machinery and other technologies.
FMCG/FMCD: Refers to the Fast-Moving Consumer Goods and Fast-Moving Consumer Durables industries, which involve the production and sale of goods that are consumed or used frequently, such as food, beverages, and household appliances.
-Karthik S.M.K
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