How AI and Trump stand in the way of your big salary hike this year

If you’re not happy with your increment this year, you could blame it on Donald Trump and/or AI. India Inc employees are likely to get an average pay hike of 9.2% in FY25 (i.e. April 1, 2024 to March 31, 2025), marginally lower than the 9.3% in FY24, according to Aon, a global professional services firm.Companies are taking a cautious stance due to factors such as global geopolitical and economic challenges, rapid rise of artificial intelligence (AI) and impact of US trade policies under the Trump administration, according to Aon, a global professional services firm.It’s a clear sign that salary increments in India are on the downward trend – they’re expected to stabilise at below 10% on average, a process that kicked off post 2022, the Aon’s Annual Salary Increase and Turnover Survey 2024-25 India revealed.In 2022, companies offered a significant 10.6% pay increase, driven by the Great Resignation of 2021, said Aon. During the Covid-19 pandemic, a record number of employees voluntarily left their jobs, prompting businesses to boost salaries to retain talent. Salary hikes stabilised at around 9.7% in 2023 and 9.3% in 2024. In FY25, three in five organisations are expected to give more than 9% increase, according to the study, which in its 30th year analysed data from over 1,400 companies across 45 industries. !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r=0;r “This [average salary hike of 9.2% in 2025] is more of a stabilisation of salary increments. This was expected due to macroeconomic levels and lower business sentiments of companies for this year compared to last year,” Amit Kumar Otwani, associate partner for Talent Solutions for India at Aon told ET.He added that previous results of the past few quarters suggest that companies have not performed well. The consumer sector is seeing a slowdown in urban demand. “And so is the auto sector; facing a slowdown in demand for passenger vehicles and utility vehicles after a bumper year in 2024,” he said.Salary increments are also projected to vary across industries with engineering design services, auto/vehicle manufacturing, and non-banking financial companies considering paying 10% or more salary hikes to employees this year. These are followed by other sectors including retail, global capability centres, real estate/infrastructure, life sciences and professional services budgeting for the highest salary increases, according to Aon.For sectors like FMCG, services, banking and tech consulting, the growth is less than the median average of 9.2%. Some of these, according to Aon India officials, could also be due to the increasing play of AI on jobs like coding (which could explain why IT coding and tech consulting will see pressure on salary hikes).“Adopting a hands-on approach to total rewards and compensation practices and leveraging AI-driven innovation will enable India Inc to achieve sustainable growth in an increasingly automated environment,” said Otwani of Aon. !function(){"use strict";window.addEventListener("message",(function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r=0;r India outlook stable“Despite external uncertainties, India’s economic prospects remain stable, with rural demand improving and private consumption maintaining momentum,” said Roopank Chaudhary, partner and rewards consulting leader for Talent Solutions for India at Aon. “Our data shows that moderation in salaries is an expected outcome given the margin pressures on companies,” he said. “The sector-wise increment trends for 2025 reflect prudence and adaptability as companies balance market challenges and the need to attract and retain talent across sectors,” he said.The study also revealed that overall attrition rates declined to 17.7% in 2024 from a high of 18.7% in 2023 and 21.4% in 2022, indicating the availability of a larger talent pool post the pandemic churn and the Great Resignation that took place.“This stability in talent availability is an outcome of increased labour force participation despite a rise in self-employment and entrepreneurial activity, which presents an opportune time for companies to focus on strategic workforce skilling, reskilling and institutional support,” according to the study’s findings .Inputs: Prachi Verma | ET