Average salary hike projected to be 9.4% in 2025: Report

Mumbai: Indian employees may expect an average salary increment of 9.4 per cent this year across industries, indicating strong economic growth and rising demand for skilled talent, a report said on Tuesday.

Over the last five years, salary increments have steadily increased, rising from 8 per cent in 2020, to a projected 9.4 per cent in 2025, according to Total Remuneration Survey (TRS) by HR consulting firm Mercer.

The automotive sector leads with anticipated increments of 10 per cent from 8.8 per cent, driven by the surge in electric vehicles and the government-led 'Make in India' initiative.

Manufacturing and engineering follow closely with an increase from 8 per cent to 9.7 per cent, reflecting a resurgence in the manufacturing ecosystem.

More than 1,550 companies in India participated in the survey, spanning diverse industries, such as technology, life sciences, consumer goods, financial services, manufacturing, automotive, and engineering.

Further, the report revealed that in 2025, 37 per cent of organisations plan to increase their headcount reflecting India's vibrant talent demand across diverse sectors.

Voluntary attrition is expected to stabilise at 11.9 per cent, with Agriculture and Chemical (13.6 per cent) and Shared Services Organisations (13 per cent) experiencing the highest rates, indicating a competitive talent market.

It is also expected that this year some organisations will focus on strategic recruitment, competitive compensation, upskilling, and employee engagement to attract talent, reduce turnover, and sustain growth to address workforce demands.

"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.

"Companies that prioritise these trends will be better positioned to attract and retain talent in a competitive market," Mercer's India Careers Leader Mansee Singhal said.