Amid fears of a global economic slowdown, Indian companies may see a reduction in the rate of salary hikes next year. Compared to FY 2022, the salary of the employees will increase less for FY 2023.
Amid fears of a global economic slowdown, Indian companies may see a reduction in the rate of salary hikes next year. Compared to FY 2022, the salary of the employees will increase less for FY 2023. Its biggest impact can be seen on IT and technology companies. Also, it will affect the candidates looking for new jobs.
However, not all sectors will see a reduction in wage growth. Deloitte India firm has disclosed this in its report. The firm has covered over 300 Indian companies. According to the report, its effect will be seen in those companies, which give increments on the basis of performance cycle of January to December.
Effect will be seen here
In contrast, technology and tech companies are anticipating a decline in salary increases. Many companies, especially in IT services, products and tech startups, are expected to decline by more than 50% in the December quarter compared to last year. This will directly affect the employees. In the financial year 2022, the average salary increase in companies making technical products was 12 percent, which may fall to 11.3 percent.
Similarly, the average growth rate in the IT sector in FY2022 was 9.4 per cent, which may come down to 8.8 per cent. The salary growth rate in companies providing IT services as a third party was 8.7 per cent, which is expected to fall to 7.8 per cent. At the same time, there was an increase of 10.5% in companies providing capital services, which may remain up to 10% in FY2023. A decrease in the rate of increment can also be seen in manufacturing units. While the average salary growth rate in this sector was 10.2 per cent in FY2022, it is expected to be 9.8 per cent in 2023.
Better salary hike expected in these areas
Some sectors in the country including hospitality, travel, tourism, consumer/FMCG and power are performing better than others and will give better pay hike to employees in the new year as compared to FY22, according to the report. Most of these are multinational companies. The services sector, which was hit the most during the pandemic, is also likely to see a big boost as they stand to benefit from the recovery in the economy.
The average wage growth rate in the consumer goods (FMCG) sector was 9.0% in the last financial year, which could be 9.8% in 2023. Similarly, in the energy sector, this rate can increase from 9.6 to 11 percent. The average increment rate in the pharmaceutical sector can be seen at 9.1 as against 8.9.
Loss to those who change jobs
The apprehension of sluggishness is also affecting the employees looking for new jobs. Such candidates have reduced their salary hike expectations. Experts say that on changing jobs, candidates used to demand a hike of 60 to 100 per cent in salary. Now this demand has increased from 20 to 30%. Many employees are changing jobs for this demand as well as for additional take-home salary of a few thousand rupees.
How much impact on key areas
Areas                         – 2022         2023
IT products                     – 12%          11.3%
IT Sector                       – 9.4%         8.8%
Manufacturing unit                – 10.2%         9.8%
