Recession be damned; Get set for Pay Hikes in 2023
The world may be bracing up for a demand slump over the next few months, by employees in India could end up getting larger pay hikes in the coming year
Over the past few weeks, we have been telling you about how recession in the United States and Europe could affect Indian IT companies or on the other hand may have limited impact on the business prospects of these companies. However, now a report claims India Inc. could be setting itself up for robust pay hikes in 2023. Recession, be damned!
Global advisory firm WTW says employees could get a larger pay hike in 2023 with companies budgeting for an overall median increase of ten percent, which translates into an average salary hike of 9.8% during the year compared to 9.5% hikes that came in 2022. We do believe that a 50 basis point hike is quite substantial.
The sectoral skew continues
The WTW salary budget planning report says financial services could witness the highest salary hikes of around 10.4% followed by banking industry with 10.2%, technology, media and gaming at 10%. The reports said concerns around inflation and a tighter labor market could be the key influencers for the projected salary budgets.
The report further said that as many as 58% of all Indian employers have budgeted for higher salary hikes during this fiscal year as against last year while 24% haven’t announced any changes. Only a small chunk of 5.4% employees had actually reduced their salary budgets compared to a year ago. The survey queried 590 companies from India.
What’s with salaries and recession fears?
What’s interesting in this milieu is that companies appear to be planning for bigger hikes at a time when the overall business outlook has been tempered since last year. The WTW survey said 41.6% of enterprises in India projected a positive business revenue outlook for the next 12 months, which is lower than the 51.5% they recorded in the fourth quarter of 2021.
Further, 7.2% of the businesses surveyed have projected a negative outlook compared to 8.6% from the previous period, which seems to suggest that enterprises are ready to accept lower margins for this period but do not want to be left high and dry from a staffing point of view when things revert back to normal.
In another survey recently, the WTW had revealed that 78% of employers were struggling on hiring and retention of employees as voluntary attrition rates in the country continued to be among the highest in the APAC region at 15.1%, which puts India second behind Hong Kong.
Work around with talent is the mantra
A report in the Economic Times quoted WTW official Rajul Mathur to suggest that companies in the country are quite aware of the business environment panning out but are willing to hedge their bets around talent. He feels that enterprises are cautiously optimistic about business prospects in the coming years and want to maintain an edge in the tight labor market.
According to the survey, many businesses cited concerns of a tighter market for resources (68.3%), employee expectations and concerns (44.7%) and anticipation of stronger financial results (26.4%). The report said a 10% salary hike would be the most in the APAC region next year with China likely to hike salaries by 6% followed by Hong Kong by 4%.
Information technology (65.5%), engineering (52.9%), sales (35.4%), technically skilled trades (32.5%), and finance (17.5%) will be the most sought-after functions for recruitment in the next 12 months, the report added.
