With the economic recovery in tow and steadily improving confidence, there was a survey released that highlighted the possible salary hikes for employees in 2022. The Deloitte Workforce and Increment Trends survey revealed that according to early estimates, the average salary increment for employees next year is going to be around 8.6 per cent. If this does come to pass, then the salary increments for 2022 would reach pre-pandemic levels i.e., as it was in 2019.
About 25 per cent of the companies that were surveyed, projected a double-digit increment for the upcoming year, said the report. It is also worth noting that as per the findings of the survey, around 92 per cent of the companies in 2021 gave increments that averaged at 8.0 per cent. Now to give an idea of the level of growth that shows, in 2020, during the pandemic, only 60 per cent of companies extended a pay hike for employees and that too only at 4.4 per cent.
Anandorup Ghose, a partner at Deloitte Touche Tohmatsu India LLP, said, “While most companies are projecting a higher increment in 2022 compared to 2021, we continue to operate in an environment where COVID-19 related uncertainty persists, making it harder for companies to forecast.”
“Some of the survey respondents have also just closed their 2021 increment cycle so 2022 increments are a fair distance away for them. GDP forecasts for FY 2021-22 were revised down after the second wave and we expect organisations to closely watch similar developments while managing their fixed cost increases next year,” added Ghose.
It is also worth noting that the Information Technology (IT) sector was found to be the one sector that was likely to offer the highest of increments in 2022. Coming in close behind to that was the Life Sciences sector in terms of increment levels. The IT sector is also the only sector that is expected to extend double-digit increments with the highest of all increments potentially coming from digital/E-commerce companies. On the opposite end of the spectrum, it was found that the retail sector, as well as hospitality, restaurants, infrastructure and real-estate companies, projected a continuation of some of the lowest increments in their respective sectors.
Keep in mind that not all employees will get the same increment, as it was mentioned in the survey report that these organisations would continue differentiated pay increases that would depend on the parameters of skill and performance. Having said that, the top performers can expect to see a salary hike of up to 1.8 times that of what an average employee might get.
Anubhav Gupta, a partner at Deloitte Touche Tohmatsu India LLP, said, “Organisations are trying to balance employee cost with what is best for their employees in what have been a difficult couple of years for many. It is heartening to see most companies extending increments in 2021 even in sectors which have not fully recovered yet. Going forward, function specific increment differentiation may become more prevalent as attrition rates vary significantly across different skills. Compensation is usually one of the top reasons for attrition, particularly at a junior management level, where virtual hiring has made it easier to jump ships.”
Now, in terms of promotions, it was estimated that around 12 per cent of employees were promoted in 2021, compared to a lower 10 per cent in 2020. As the priorities change with the morphing economical situation, around 12 per cent of companies were found to have updated their bonuses or variable pay plans to align with the reward structure. On the hiring side of things, it was found that 78 per cent of companies stated that they have started recruiting at the same pace as they used to before the Covid-19 pandemic.
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