Appraisal season has begun: What pay hike can you expect this year?

With the start of a new year, there is one thing many working people eagerly anticipate: appraisals.

A recent survey has shown that employees in India can expect a significant salary increase this year.

ALSO READ | Expect better salary hike in 2025 than you got last year: Survey

Reports already indicate that Infosys Ltd is set to implement its annual pay hikes starting in February, with those at job level 5 (JL5) likely to receive theirs first.

This year’s Total Remuneration Survey (TRS), conducted by HR consulting firm Mercer, saw participation from over 1,550 companies across various sectors, including technology, life sciences, consumer goods, financial services, manufacturing, automotive, and engineering.

More from Explainers

Is your house heating up and making you miserable? Paint it white How ChatGPT is becoming everyone’s BFF and why that’s dangerous

How much pay hike can you expect?

Employees across industries in India can expect an average salary increase of 9.4 per cent this year, indicating strong economic growth and the growing demand for skilled talent, according to the report.

Over the past five years, salary increments have shown consistent growth, climbing from 8 per cent in 2020 to an expected 9.4 per cent in 2025, as per Mercer’s Total Remuneration Survey (TRS).

The automotive sector is leading the trend, with expected increments rising from 8.8 per cent to 10 per cent. This growth is due to the rapid adoption of electric vehicles and the government’s ‘Make in India’ initiative.

Editor’s Picks

1

What Union Budget 2025 can do for a drone revolution that Indian agriculture needs 2

Labour Code implementation: Will the Union Budget 2025 finally set the date?

Similarly, the manufacturing and engineering sectors are seeing a jump from 8 per cent to 9.7 per cent, reflecting renewed energy in the manufacturing domain.

As per the survey, 37 per cent of organisations plan to increase their workforce by 2025, reflecting demand for talent across various industries.

Voluntary attrition is projected to stabilise at 11.9 per cent, with Agriculture and Chemical (13.6 per cent) and Shared Services Organisations (13 per cent) registering the highest attrition rates, indicating fierce competition for skilled workers.

Mansee Singhal, India Careers Leader at Mercer, was quoted as saying by PTI, “India’s talent landscape is experiencing a remarkable transformation. Pay premiums are also reshaping the workforce, additionally, the increased adoption of performance-linked pay plans by more than 75 per cent of organisations, signifies a holistic shift towards performance orientation, both in the short term and long term.”

She added, “Companies that prioritise these trends will be better positioned to attract and retain talent in a competitive market.”

ALSO READ | Will Union Budget 2025 deliver on financial sector reforms?

How AI can impact talent management this year

The survey also explored the influence of Artificial Intelligence (AI), automation, and digital transformation on India’s talent market.

India has positioned itself as a global leader in AI adoption, with 55 per cent of organisations actively incorporating AI into their operations, News18 reported.

CEOs in India view AI as a critical factor for driving future growth and productivity, as per the survey.

Malathi KS, Mercer’s Rewards Consulting Leader for India, said “From adopting AI-driven solutions for personalised rewards to redefining the Employee Value Proposition with flexibility and wellness at its core, businesses in India are prioritising value-driven approaches. These trends reflect a transformative era for the workforce, positioning India as a talent hub.”

Infosys’ salary hike

According to The Economic Times, Infosys plans to begin its annual pay hike rollout in February, in line with its prior announcement. Employees at job level five (JL5) will receive their letters in February, with the increment being effective from January 1.

ALSO READ | Why has Infosys deferred salary hikes?

For those at JL6 and above, letters will follow in March, with hikes effective from April.

The raises will be a part of the appraisal period from September 2022 to October 2023, with eligible employees having received their ratings in December 2023. Typically, employees would have received hike letters in June for increments effective from July, but this did not happen in 2024, sources told ET.

The most recent pay hike was effective from November 1, 2023.

What happened in 2024?

According to Aon’s Annual Salary Increase and Turnover Survey 2023-24 for India, employees were projected to receive a 9.5 per cent salary increase in 2024. This marked a slight decline from the 9.7 per cent hike recorded in 2023.

The survey, which analysed data from 1,414 companies across nearly 45 industries, indicated that the manufacturing sector would lead with an anticipated salary rise of 10.1 per cent in 2024.

Following closely, the life sciences and financial services sectors were expected to see a 9.9 per cent increase, while Global Capability Centres ranked third, with a predicted 9.8 per cent salary hike.

Roopank Chaudhary, partner and chief commercial officer for Talent Solutions at Aon India, commented: “The projected increase in salaries in the Indian formal sector indicates a strategic adjustment in response to the evolving economic landscape. Despite a conservative global sentiment, industries such as infrastructure and manufacturing continue to project robust growth, indicating the need for targeted investments in certain sectors.”

With inputs from agencies