India Inc is likely to offer a salary hike of 7.7 percent in 2021. The Salary Increase Survey by professional services firm Aon showed that 88 percent of surveyed companies reported that they intend to increase salaries in 2021 in India.
In 2020, the average hike given was 6.1 percent with 75 percent companies offering hikes.
Amidst the Coronavirus outbreak, there was pay freeze implemented in 2020. However, the Aon survey said that the salary freeze has now been revoked.
Since 2012, salary hikes in India have seen a declining trend. The year 2020 saw the sharpest decrease to 6.1 percent due to COVID-19.
The Aon survey said that among sectors, e-commerce and venture capital-backed firms will offer highest salary hike of 10 percent while hospitality/restaurants will offer the lowest at 5.5 percent in 2021.
The study analysed data across 1,200 companies from more than 20 industries.
Nitin Sethi, partner and CEO of Aon’s performance and rewards business in India said that they expect organizations to review their compensation budgets in the second half of the year once the exact financial impact of the Labor Codes is known.
"It is also possible that some of the salary increments may not translate into higher cash-in-hand for employees if organizations choose to pay higher provident fund contributions on the new definition of Wages," he added.
Despite a tough 2020 with stringent lockdowns, India continues to project the highest salary increases among the BRIC nations.
Roopank Chaudhary, partner in Aon’s human capital business in India said that the highest-paying sectors in 2021 continue to be the ones from last year. These include IT, ITeS, life sciences, e-commerce and fast-moving consumer goods (FMCG).
"It is notable that the sectors that were adversely impacted by COVID-19, such as retail, hospitality and real estate, are projecting healthy increases in the range of 5-6 percent. Such numbers reflect their intent to stay relevant and to control attrition, which had increased for these industries last year," he added.