There is good news for employees working in private companies. In the year 2024, companies are preparing to increase the salary of their employees significantly. It has been revealed in many surveys and reports that this year the average salary of people working in the private sector may increase by 9.5% to 10%.
This increase is slightly more than last year i.e. 2023. In 2023, employees got an average salary hike of 9.3% to 9.7%. The main reason for this year’s increase is the country’s rapidly growing economy. India’s GDP growth rate in the financial year 2023-24 was 8.2%, which is higher than many big countries of the world.
Salary hike 2024: at a glance
| Description | data |
| average salary hike | 9.5% – 10% |
| Last year’s increase (2023) | 9.3% – 9.7% |
| Sectors with highest hike | E-commerce, Manufacturing, Engineering |
| Sectors with least hikes | IT, Startup |
| Attrition Rate (2023) | 18.3% |
| Attrition Rate (2022) | 21.2% |
| Companies included in the survey | 1,414 |
| Industries included in the survey | 45 |
Sector-wise salary hike estimates
This year, salary hike is expected to be different in different sectors. In some sectors there may be more growth than average, while in others it may be less. Let us know how much increase can happen in which sector:
- E-commerce: 10.9%
- Financial Services: 10.1%
- Manufacturing: 10.1%
- Engineering: 10%
- Retail: 10%
- Professional Services: 10%
- IT: 8.5%
- Startup: 8.5%
Reasons behind salary hike
There are many reasons behind the good increase in salary this year:
- Fast economic growth: India’s economy is growing rapidly, due to which companies are earning good profits.
- Demand for skilled employees: There is a shortage of skilled employees in many sectors, hence companies are paying higher salaries to retain good employees.
- Increase in inflation: Due to rising inflation, companies are increasing salaries to provide relief to employees.
- Competition: There is competition among companies to retain good employees.
- Development of new sectors: New sectors like e-commerce are growing rapidly, due to which salaries are increasing more there.
How to understand salary slip?
Salary slip is an important document of your income. It is important to understand this so that you can keep accurate records of your earnings and deductions. Let us know the main parts of the salary slip:
- Basic Salary: This is your basic salary, which is 40-50% of the total salary.
- House Rent Allowance (HRA): This is an allowance given for rent.
- Special Allowance: This is an additional allowance given by the company.
- Provident Fund (PF): This is your retirement savings, to which both you and the company contribute.
- Professional Tax: This is a tax imposed by the state government.
- Income Tax: This is a tax imposed by the Central Government, which depends on your income.
- Net Salary: This is the amount that is credited to your account after all deductions.
How to take advantage of salary hike?
If there is an increase in salary, you can take advantage of it in this way:
- Make a budget: Make a new budget according to your new salary.
- Increase savings: Invest some part of the extra money in savings.
- Repay the loan: If you have any loan then try to repay it quickly.
- Invest: Invest money for the long term, such as in mutual funds or the share market.
- Upgrade Skills: Invest money in improving your skills, so that you can progress further.
Reduction in attrition rate
One good thing is that the attrition rate has decreased this year. This rate was 21.2% in 2022, which will reduce to 18.3% in 2023. This means that employees are satisfied with their current jobs and companies are also successful in retaining them.
India vs other countries
In terms of salary hike, India is ahead of many big countries of the world. Here’s a comparative look:
- India: 9.5% – 10%
- Bangladesh: 7.3%
- China: 5.7%
- Japan: 3.6%
Effect of salary hike
The increase in salary affects not only the employees but the entire economy:
- Increase in consumption: With more money in people’s pockets, demand in the market will increase.
- Increase in savings: People will be able to save more, which will increase money with banks.
- Increase in tax revenue: The government will get more tax.
- Real estate boom: People may turn to buying homes.
- Investment in Stock Market: People can invest more in the stock market.
Challenges and Precautions
Although the salary hike is good news, it also comes with some challenges:
- Inflation: Inflation may also increase with increase in salary.
- Tax Slab: Higher salary means you may fall in a higher tax slab.
- Pressure on companies: There will be pressure on companies to increase costs.
- International competition: Paying higher salaries can make Indian companies expensive at the international level.
future prospects
There are some estimates regarding the trend of salary hike in the coming time:
- Skill-based hike: Salary will increase based on skills, not just experience.
- Performance-Linked Increment: Companies can increase salaries based on performance instead of fixed hikes.
- Flexible Benefits: Employees will be able to choose benefits as per their needs.
- Impact of remote work: There may be a change in the salary structure due to remote work.
- Impact of AI and Automation: Some jobs may disappear, while some new jobs may yield higher salaries.
Disclaimer: This article has been written for information purposes only. Salary hikes and related figures may change over time. Please consult your employer or financial advisor. All figures and information are based on general estimation and may differ from reality. Do not consider the information given in this article as final for making any kind of financial decision.
