March 10, 2022
Almost 100% of organizations will provide increments in 2022, as compared to 92% in 2021 and 60% in 2020
34% of the organizations will give double-digit average increments compared to only 20% in 2021
Employees at the junior management level will receive a double-digit increment driven by a high amount of attrition at that level
Life sciences and IT sector will pay out the highest increments, followed by fintech, IT product companies, and digital/e-commerce
Employees will see average salary hikes of approximately 9-10% in 2022 as per the 2022 Workforce and Increment Trends survey report by Deloitte Touche Tohmatsu India. The projected increment is higher than the pre-pandemic levels of 2019 by 50 basis points.
In February this year, services firm Aon revised its salary increment trend to 9.9% versus an average of 9.4% that it had forecast in September 2021. Mercer, an American asset management firm, projected an increase of 9% in salaries across industries in 2022. Similarly, a survey by British-American risk management firm Willis Towers Watson pegged a median increase of 9.3% in salaries in 2022 compared to 8.1% in 2021.
It is also anticipated that almost 100% of organizations will provide increments in 2022, as compared to 92% in 2021 and 60% in 2020 as per the Deloitte survey. This year, 34% of the organizations will give out double-digit average increments compared to only 20% in 2021 and 12% in 2020. On average, employees at the junior management level are expected to receive a double-digit increment driven by a high amount of attrition at that level. The average attrition rate has increased from 15.8% in 2020 to 19.7% in 2021, with voluntary attrition increasing by more than 5% between 2020 and 2021 across the country.
The increments are expected to be higher across all major sectors, compared with 2021 and the pre-pandemic levels observed in 2019. It is expected that life sciences and IT sectors will give the highest increments, followed by fintech, IT product companies, and digital/e-commerce organizations – all of which are expected to provide double-digit increments. As per industry experts, hi-tech sectors will see the maximum level of increase. For instance, the blockchain segment is anticipated to see hikes of 20-22%, followed by robotic process automation, cybersecurity, and artificial intelligence segments that could potentially see a 16-20% increase, while salaries for employees in mobile platforms and cloud computing sectors will likely increase by 14-16%. Retail, consumer products, and manufacturing segments could see salary hikes of 9 to 9.5%, according to the report.
Deloitte’s survey also highlighted that while the average increment of 9.1% is for existing employees, overall employee cost could increase even further due to factors such as incremental hiring, one-time pay corrections, and retention bonuses..
In 2020, due to the adverse impact of the pandemic on the economy, pay cuts and hiring freezes were commonplace. Despite that, the average hike was 6%. This situation improved slightly in 2021 as increments reached 8.8%, driven by the reversal of pay cuts, increased demand for tech and digital talent, and the introduction of COVID-19-specific benefits. However, buoyed by the pick-up in economic and increased hiring of tech talent, companies will surpass pre-pandemic levels of increments as the focus will be on retention of talent through rewards in 2022. Also, with variable pay being a function of business performance, bonuses are expected to be better than they were in 2021.