Salary increments to continue to beat pre-Covid levels in 2022: Experts

Among sectors witnessing higher increment levels, firms agree that IT, healthcare and e-commerce lead the way

Buoyed by a resurgence in economy and sustained voluntary attrition, salary increments will continue to beat pre-Covid levels in 2022.

According to the hiring and manpower industry, while pre-pandemic salary increment levels remained at higher single digits even as the same fell as Covid-19 hit, the same is set rise to double digits, beating the previous high.

"Not just the Great Resignation triggered voluntary attrition but even work has expanded across businesses forcing them to hire more than ever. As a result, they are also forced to match salaries internally. Hence, we can expect a tectonic shift in increment levels from the usual 8-10 per cent pre-pandemic to 15-18 per cent or even higher in 2022," said Kamal Karanth, talent specialist and co-founder of Xpheno, a specialist staffing company.

Similarly, leading global professional services firm Aon's latest Salary Increase Survey in India projects increment levels of 9.9 per cent in 2022, up from 6.1 per cent in 2020 and 9.3 per cent 2021 and 9.3 per cent in 2019. According to Nitin Sethi, partner and CEO of Aon’s Human Capital Solutions in India too, this salary increase trend is fueled by economic recovery and the need for organizations to invest in new age capabilities to build a resilient workforce.

In fact, despite a tough few months with the second and third waves of infections during the COVID-19 pandemic, India continues to project the highest salary increases among the BRIC (Brazil, Russia, India and China) nations in 2022, with Brazil at 5.0 per cent, Russia at 6.1 per cent and China at 6.0 per cent.

"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 per cent and above.
However, we do see some potential headwinds due to anticipated high inflationary pressures and the still-prevalent COVID-19 threat," said Roopank Chaudhary, partner in Aon’s Human Capital Solutions in India.

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Among sectors witnessing higher increment levels, firms agree that information technology (IT), healthcare and e-commerce lead the way.

Balasubramanian A, business head (consumer and healthcare), TeamLease Services pegs these sectors to clock increments of 10-12 per cent while niche skills in the tech domain could attract 20 per cent and beyond. "People are in for increments not seen in the last 5-6 years in the range of 8-12 per cent, specially for tech domains with niche skills like developers. Even mass skills like sales would attract a healthy increment of upwards of seven per cent, depending on sectors," said Balasubramanian.

However, sectors like manufacturing and consumer goods where input costs and logistic costs have gone up, cost pressure might not leave much bandwidth for exorbitant hikes, leaving them with mid single digit range, he added.

Meanwhile, the Aon Salary Survey puts e-commerce, IT and professional services in the higher range with increment levels of 10-12 per cent whereas engineering design services, cement, metals and mining could see lower levels of 7-8 per cent.