India’s Salary Increments to Stay Flat Amid Global Uncertainty, Aon Survey Shows

Bengaluru: Salary increments in India are expected to remain almost unchanged in 2024-25, with an average hike of 9.2%, slightly down from last year’s 9.3%. According to Aon’s Annual Salary Increase and Turnover Survey, this marks a continued trend of moderation in wage growth that began after the economic turbulence of the pandemic and the subsequent Great Resignation period.

Wage Growth Shows Signs of Stabilization

The survey, which gathered data from over 1,400 companies across 45 industries, highlights that salary increases have gradually slowed since 2022. During the Great Resignation, many companies offered hefty pay raises of 10.6% to retain staff amidst widespread employee turnover and a shortage of skilled workers. However, as the workforce stabilizes and global uncertainties persist, wage hikes have begun to level off.

In terms of sector-specific changes, the survey found that engineering design services and automotive manufacturing will see the largest increases, with salaries rising by 10.2%. Global capability centres (GCCs) and engineering manufacturing will follow closely at 9.7%. On the other hand, sectors such as banking and technology consulting services are forecast to offer more conservative raises, with expected increments of 8.8% and 7.7%, respectively.

A Strategic Shift in Compensation Strategies

While salary increases remain modest, companies are increasingly focusing on strategic adjustments to maintain competitiveness. Roopank Chaudhary, Partner and Rewards Consulting Leader at Aon, noted that AI-driven talent strategies, productivity-focused compensation models, and skill-based pay are becoming more common. These efforts are part of businesses’ broader strategies to adapt to evolving global factors, including economic pressures, geopolitical uncertainty, and technological advancements.

Despite the moderation in salary growth, a significant proportion of companies—around 60%—are expected to provide pay raises of 9% or more in the coming year. Chaudhary also pointed out that, while AI and trade disruptions will continue to shape the workforce, their impact won’t be as dramatic as the challenges presented by the pandemic.

Hiring Outlook Remains Positive

In terms of hiring, the survey shows positive growth expectations for 2025. About half of the companies anticipate a topline growth of over 10%, and 40% plan to expand their workforce by at least 10%. While wage increments may be more cautious, businesses are actively looking to grow their teams. Notably, 57% of organizations plan to retain headcount within a 10% range, signaling stability in workforce planning.

Interestingly, employee attrition rates have shown a decline. The overall attrition rate in 2024 dropped to 17.7%, compared to 18.7% in 2023 and 21.4% in 2022. This suggests that the labor market is stabilizing, with fewer employees opting to leave their jobs post-pandemic, providing companies with access to a larger talent pool.

Looking Ahead: A New Normal for Wage Growth

As businesses navigate the changing global landscape, India’s labor market is finding its balance after the upheaval caused by the pandemic and the Great Resignation. While salary growth might be slowing down, the focus on skills and productivity reflects a shift toward a more strategic, sustainable approach to compensation.

Going forward, salary increments are likely to hover around the 9% mark, as companies balance between attracting talent and maintaining cost efficiency. For professionals, the question remains: how will the future of work and compensation evolve in the face of continuous global shifts and advancements in AI? Only time will tell, but the outlook remains cautiously optimistic.