2025 may not be a great year for pay hiking. Companies expect it to be lower than what their companies offered last year. Why have Indian companies become more cautious about giving annual salary increases this year? Mint explains:
What kind of raises can you expect this year?
Consulting firm Aon estimates that company employers will offer average hikes that are lower than their 9.3% salary increases last year. Peer Mercer’s annual total compensation survey predicts a 9.4% salary increase across the Indian industry in 2025, compared to an estimated 10% last year. Even top performers rarely please, as companies scrutinise more before offering better pay increases. According to consultants, hiking rates have been higher when absolute pay levels are low, but as base pay increases in many sectors, percentage hiking decreases.
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Do you explain the low hike?
The average pay raise is estimated to be lower than last year, but the decline is not that great. The slowdown in business revenues that are constraining budgets and lethargic economic growth have made businesses solid, the consultant said. According to Anandorup Ghose, a partner at Deloitte India, many companies are becoming even more cautious as the total pay costs increase is higher than revenue growth. Also, unlike 2022 and 2023, when attrition was high, the demand for the workforce is now high unless the candidate has special skills.
Who should expect a good hike?
Those who upgrade their latest AI-related technology or advanced cybersecurity and data analytics profile skills will see a salary increase of 1.6-2 times that other roles earn. Bank hikes are expected to be lower than last year. IT, GCC and startup sectors typically offer higher increments. However, when the wear and tear is low, a big hike is unlikely.
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If it’s not a good hike, what?
To ease the easing of enthusiasts, companies have moved from hiring to maintaining top performers at any cost. Some startups offer exclusive credit cards to top talent. The Bengaluru-based product innovation startup offers fluctuating wages along with senior roles, along with employee equity ownership plans (ESOP) and stock price increase rights (SARS). Some companies pay short-term business management degrees from leading B-schools in India and abroad to maintain their top performers.
Does low hikes increase wear and tear levels?
It’s unlikely. The job market is stable. Over the past few years, employment across the sector has been slower. As a result, normal increments and pay jumps during job changes have been eased. In fact, according to AON, the highest increase in the past 7-8 years was 2022. Even if the person who leaves falls into the top talent bracket, companies may be willing to make counter offers. Still, under-drain at the junior level continues to plague businesses as low-wage performance is high in demand.
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