India will see an average wage increase of 8.8% in 2022; engineering and IT functions to see major hires, HR News, ETHRWorld
Wage increases are making a comeback. Indian companies plan to give employees bigger raises in 2022 as they recover from the economic fallout from the pandemic and face growing challenges in attracting and retaining employees.
Salaries are projected to see a median salary increase of 9.3% in 2022 (translating to an average salary increase of 8.8%) compared to the actual median salary increase of 8% (salary increase average of 7.4%) in 2021. , according to the latest Willis Towers Watson salary budget planning report.
As a large emerging market, India continues to predict the biggest pay rise for 2021 in the Asia-Pacific region. Sri Lanka is expected to see an increase of 5.5%, China of 6%, Indonesia of 6.9% and Singapore of 3.9%.
Economic Outlook, Hiring and Attrition Rates
Pointing to a much-anticipated economic recovery, a majority (52.2%) of businesses in India forecast a positive business revenue outlook for the next 12 months, up from 37% in the fourth quarter of 2020. This translates to an increase in hiring in all companies. 30% of companies plan to hire in the next 12 months. This is almost three times more than last year.
The survey also shows that a large share of hiring across all sectors is likely to occur in critical functions such as engineering (57.5%), information technology (53.4% ), technical trades (34.2%), sales (37%). ) and finance (11.6 percent). These jobs will require a high salary.
Furthermore, India’s attrition rates, both voluntary and involuntary, have been lower than other countries in the region. The voluntary attrition rate was 8.9% and the involuntary attrition rate was 3.3%.
Rajul Mathur, Consulting Manager – India, Talent and Rewards, Willis Towers Watson, said: “Increased business optimism is clearly translating into higher salary budgets and increased hiring activity. The pandemic has been a watershed moment in how organizations plan for their staff expenses. »
“While attracting and retaining talent remains a challenge, the core value proposition of employees will now need to go beyond competitive salaries and increasingly focus on a broader range of benefits, -being, development and overall employee experience. This trend is likely to reshape people’s spending and total rewards philosophy in India in the future,” added Mathur.
Industry trends in India
The report also suggests that the high-tech sector is expected to see the largest wage increase at 9.9% in 2022, followed by the consumer products and retail sector at 9.5% and manufacturing at 9.5%. 9.30%. In terms of proportional increase over last year, the high-tech sector leads again with a projection of nearly 1.9% increase over 2021.
“Covid-19 has accelerated the digitalization process in all sectors, including automation and artificial intelligence. These developments, along with the early adoption of the remote work model by the high-tech sector, have had a positive impact on the sector’s wage projections. The manufacturing and retail sectors have seen growing demand driven by the easing of Covid-19 restrictions and a positive outlook for incoming orders and consumer sentiment,” Mathur said.
In contrast, the energy sector received the lowest real wage increase in 2021, at 7.7%. The energy sector’s projected salary in 2022 is also the lowest at 7.9%.
Mathur explained, “The combination of the current macroeconomic environment, the typical business cycle and the lingering impact of the pandemic on businesses has hurt the energy sector the most. That said, it can be expected that salary increases for the renewable energy sector will be relatively higher as India shifts towards clean energy. »
Skills bonus and variable compensation
Employees can also expect higher average variable compensation at 15.7% this year for the 2020 performance year. In terms of employee segments, the middle management, professional and support staff category saw the most proportional increase in variable pay, from 11.6% last year to 22.2% this year. The executive-level payout is expected to rise slightly to 27.9% from the actual increase of 26% last year.
For top performers, the average salary increase budget allocation is 22.1%, while it is 43% for top performers.
“With low pay increases last year, organizations moved toward a broader distribution of variable pay across employee segments by role, seniority and performance levels this year,” Mathur said.
The Salary Budget Planning Report is compiled by Willis Towers Watson data services practice. The bi-annual survey was conducted online between May and June 2021. A total of 1,405 companies participated in the survey, representing a cross-section of industries from 13 Asia-Pacific markets. The survey has 435 Indian companies participating this year.