Indian employees likely to see bigger salary hike in 2023, says report

Salaried employees in India might get a bigger pay hike in 2023, with companies budgeting for an overall median increase of about 10 per cent. This translates to an average salary hike of 9.8 per cent in 2023, as compared to the actual 9.5 per cent payout in 2022.

According to a report published in the Economic Times, the Willis Towers Watson Salary Budget Planning Report stated that the higher projected salary budget has been influenced by inflation and concerns over tighter labour market. 

Some of the sectors which have been included in the survey are- financial services, banking, and technology, media and gaming. These sectors are expected to report the highest salary increase at 10.4 per cent, 10.2 per cent and 10 per cent.

54 per cent of the employers have budgeted for higher salary increase this year, compared to the previous year. 24.4 per cent of them are making no changes to their budget and only 5.4 per cent have reduced their budget as compared to 2022.

At 10 per cent salary increase, India remains to be at the top spot in the Asia-Pacific region. While China is projected to see an increase of 6 per cent, Hong Kong and Singapore are expected to see increase at 4 per cent in 2023,. The voluntary attrition rate is also highest in India at 15.1 per cent, followed by Hong Kong. 

While 42 per cent of Indian companies have projected a positive business revenue outlook for the next year, only 7.2 per cent have projected a negative outlook. According to the report, "the most cited reasons for organisations reporting higher 2022 actual salary budgets versus projections made last year were concerns over a tighter labour market (68.3 per cent), employee expectations / concerns (44.7 per cent) and anticipation of stronger financial results – actual or forecasted (26.4 per cent)."

Rajul Mathur, Consulting Leader India, Work and Rewards, WTW, in a statement, said: “2022 saw actual salary increments being higher than budgets and this was largely due to better-than-expected business performance and the need to retain talent. Despite the economic headwinds, higher projections for 2023 reflect cautious business optimism and a continued tight labour market”.