Employees are expected to see a hike of 9.9% in their salaries this year even amid the second and third wave of COVID-19 pandemic, according to a survey conducted by professional services firm Aon India. This compares to a hike of 9.2% in salaries last year and a 6.1% growth in 2020. The projections for 2022 show that this year will see the highest salary increase since 2016. However, the survey also found that rate of resignations in 2021 was the highest in over two decades, signifying the impact of great resignation on India, as reported in FE.
Attrition figure, which measures the rate at which employees leave a company, stood at 21% in 2021, according to the survey. In comparison, attrition was 12.8% in 2020 while it was 19.8% in 2011, the second highest rise in the last two decades.
Globally, a record number of employees have left their jobs or are planning to do so in the near future, according to McKinsey, a trend which has stemmed the tide of the Great Attrition (or Great resignation) and is expected to continue in near future. Many companies are fixing this by offering well-intentioned quick fixes like bumping up pay or financial perks, but that has fallen flat. Rather than sensing appreciation, employees sense a transaction. This transactional relationship reminds them that their real needs aren’t being met, McKinsey report said.
Even sectors that struggled during the first wave of the pandemic, such as retail, logistics and quick-service restaurants, have bounced back by focusing on modern trade/digital channels, which is reflected in salary increases of 8 percent and above.
E-commerce, IT sectors expected to see highest salary hikes in 2022
The recent survey from Aon India published Wednesday, which has measured data from 1,500 companies from over 40 industries, also found that e-commerce, hi-tech/information technology and life sciences ranked amongst the sectors which are expected to see the highest salary rise in 2022. E-commerce is expected to see the highest salary hikes in 2022 at 12.4% while hi-tech/information technology is projected to see an average hike of 11.6%.
“Salary increases should come as a welcome break for employees amidst a volatile period. For employers, it could emerge as a double-edged sword when you combine the rising cost of talent with record-high attrition numbers. This trend is fueled by economic recovery and the need for organizations to invest in new age capabilities to build a resilient workforce,” Nitin Sethi, partner and CEO of Aon’s Human Capital Solutions in India said.
India Inc resilient despite the COVD-19 pandemic
For 2022, outlook for salary hikes in India is expected to be highest amongst the BRIC (Brazil, Russia, India and China) nations despite the impact of second and third waves of COVID-19 pandemic. Brazil is expected to see a 5% hike while Russia and China are expected to see an increase of 6.1% and China 6.0%.
“We believe that the fundamentals of the Indian economy remain strong and that there is a positive business sentiment. Even sectors that struggled during the first wave of the pandemic, such as retail, logistics and quick-service restaurants, have bounced back by focusing on modern trade/digital channels, which is reflected in salary increases of 8 percent and above. However, we do see some potential headwinds due to anticipated high inflationary pressures and the still-prevalent COVID-19 threat,” according to Roopank Chaudhary, partner in Aon’s Human Capital Solutions in India.