India Inc’s average salary hike likely to drop to 9.5% in 2024

The average salary hike by India Inc. this year is expected to be 9.5% in 2024, which is a slight drop compared to the actual increase of 9.7% in 2023, as sectors like technology consulting and services, and retail witness tepid business sentiments, according to global professional services firm Aon's latest report.

Around 56% of the companies expect average salary hikes between 9-12%, down from 60% last year, while the number of companies expecting salary hikes of 6-9% are 21%. Around 15% of the companies, up from 13% last year, see the average salary hikes at 12% in 2024. Around 9% of the companies, up from 7% last year, see less than 6% salary hikes in the year, the survey report shows.

In the levels of management, the higher increments at 9.9% are expected in the lower levels of management, followed by 9.5% in middle management and 9.1% in the top or senior management. "Three in four organisations expected to give more than 9% increase in 2024," says the report.

Aon's Annual Salary Increase and Turnover Survey 2023-24 analyses data across 1,414 companies from almost 45 industries.

The report says industries such as infrastructure and manufacturing continue to project robust growth. The projected average salary hikes for 2024 remain the highest at 10.1% in manufacturing, followed by financial institutions and life sciences at 9.9% each.

Industries such as global capability centres, chemicals and professional services will see the average salary increases of 9.8%, and 9.7% each, respectively. Technology consulting and services at 8.2% and retail at 8.4% remain the two industries that could see the lowest average salary hikes.

Jang Bahadur Singh, director for Talent Solutions at Aon in India, says in 2023, organisations navigated a challenging environment, balancing a generous average salary increment amid high attrition. "As leaders prepare for 2024, their focus is likely to shift towards building a supportive work environment to foster employee engagement in a dynamic job market.”

The survey shows the overall attrition rates fell from 21.4% in 2022 to 18.7% in 2023, which shows the job market remains competitive and that turnover rates may have reached their peak. "A decrease in attrition is favourable for organisations allowing them to direct resources towards improving capability and enhancing productivity, thereby creating a positive cycle."

In terms of macroeconomic tailwinds and headwinds, the report says India continues a high growth trajectory amid geopolitical tensions. Aon’s business outlook for 2024 says 16% of companies are expected to report high revenue growth at 20%, while 53% could see moderate revenue growth of 5-20%. Around 29% of the companies surveyed could see no impact on the projected revenue growth of 0-5%.