Indian workers set for 10% pay hike in 2023
Workers in India are expected to receive pay rises of 10% in 2023 as companies struggle to keep and recruit staff, according to global advisory firm Willis Towers Watson (WTW).
The company’s Salary Budget Planning report for 2022-23 found that more than half (58%) of employers in India have budgeted for higher salaries for staff for the ongoing fiscal year compared to last year, when pay went up by an average 9.5%.
However, a quarter of employers (24.4%) have not made changes to their budget, while just 5.4% have reduced the budget as compared with 2021-22, the report said. It also revealed that, at 10%, salary increases in India continue to be the highest in the Asia-Pacific region.
WTW surveyed organisations in 168 countries in April and May 2022, including 590 in India.
As well as the pay rise statistics, the survey found that 42% of companies in India are expecting improved revenues for the next 12 months, while only 7.2% have projected a negative outlook.
In addition, companies in information technology (65.5%), engineering (52.9%), sales (35.4%), technically skilled trades (32.5%) and finance (17.5%) are expected to be the most rigorous recruiters in the next 12 months.
“Voluntary attrition rates in India continue to be among the highest in the region at 15.1%, only second to Hong Kong,” the report said. “Last year 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.”
Rajul Mathur, WTW Consulting Leader India, Work and Rewards, said: “Despite the economic headwinds, higher projections for 2023 reflect cautious business optimism and a continued tight labour market.
“The financial services, banking and technology, media and gaming sectors are expected to see the highest salary increase at 10.4%, 10.2% and 10%, respectively,” he stated.
“We saw significant salary increases across sectors in 2022 and a similar trajectory is expected in 2023. With increased focus on technology enabled growth, the demand for digital skills is driving pay increases for tech talent, especially in the technology, media and gaming, banking and financial services sectors.
“According to the report, better-than-expected business performance also resulted in higher variable pay-outs in 2021-22 across career bands. Companies are allocating more variable pay budgets to above average and top performers,” he added.
“With such a dynamic business environment, coupled with a hot talent market, it is critical for organisations in India to develop a compensation strategy aligned with macro-economic realities, sector dynamics, business objectives and employee expectations.
“We’re seeing organisations focus on long-term incentives, innovative career growth opportunities, flexible working and overall wellbeing to grapple with the current talent supply challenges.”
Inflation slows but is still above 13%
Wholesale Price Inflation in India fell slightly in July 2022, to a five-month low of 13.93% and down from 15.18% in June.
Inflation slowed for food items and manufactured products, although fuel and power inflation was up again, from 40.38% in June to 43.75% in July.
This is the 16th month in a row that wholesale inflation has been over 10% in India. The Commerce and Industry Ministry also revised May’s inflation rate upward to a fresh high of 16.63% from the earlier estimated inflation rate of 15.88%.
In the fuel and power sectors, diesel inflation rocketed in July to hit 72.4%, from a four-month low of 54.9% in June. Petrol inflation fell marginally, from 57.8% to 55.3%.
“Inflation in July 2022 is primarily [caused] by rise in prices of mineral oils, food articles, crude petroleum & natural gas, basic metals, electricity, chemicals & chemical products, food products, etc., as compared to the corresponding month of the previous year,” the Department for Promotion of Industry and Internal Trade in the Commerce and Industry Ministry said in a statement.