Chennai: Annual salaries in the formal sector in 2024 are projected to rise by 9.5 per cent, a tad lower than 9.7 per cent in 2023. Still, India will continue to see the highest rise in the Asia Pacific region.
Salary increase in India seems to have stabilized at high single digits, after the post-pandemic high increments in 2022. Annual salary hike which stood around 10.6 per cent in 2022, had moderated to 9.7 per cent in 2023 and is expected to grow by 9.5 per cent in 2024, as per the survey by Aon. Annual salary hike stood at 12.6 per cent in 2011.
Moderate optimism in business growth amidst geopolitical tensions could support the growth in salaries in 2024. While lagging private investments amidst fears of US, UK and Japan recession make work against business growth, government spending in infrastructure and logistics, which makes India a preferred investment destination and easing inflationary fears are positives for the job market.
Among the sectors that would provide higher salary hikes, manufacturing tops at 10.1 per cent, followed by financial institutions at 9.9 per cent, Global Capability Centres at 9.8 per cent, Life Sciences at 9.9 per cent and FMCG at 9.6 per cent. According to Aon, three in four organisations are expected to give more than 9 per cent increase in 2024.
India will continue to grow fastest in the Asia Pacific region, which is slated for a 4.1 per cent rise in 2024. China is likely to see salaries rise by 5.7 per cent, Bangladesh by 7.3 per cent and Indonesia by 5 per cent.
With the inflation projected to ease down in 2024, the real wage growth would still be higher compared to 2023. The survey projects 4.9 per cent real wage growth in the formal sector against 4.2 per cent in 2023. Junior management is expected to see the highest salary growth of 9.9 per cent while middle management may get a 9.4 per cent hike and senior management 9.1 per cent.
The survey also reveals that the overall attrition rates fell from 21.4 per cent in 2022 to 18.7 per cent in 2023. This highlights a job market that remains competitive and that turnover rates may have reached their peak. A decrease in attrition is favourable for organisations allowing them to direct resources towards improving capability and enhancing productivity, thereby creating a positive cycle.
“In 2023, organisations navigated a challenging environment, balancing a generous average salary increment amidst high attrition rates. As leaders prepare for 2024, their focus is likely to shift towards building a supportive work environment to foster employee engagement in a dynamic job market,” Jang Bahadur Singh, director for Talent Solutions at Aon in India said.
