There is good news for working people in India. Even in 2026, companies can increase employee salaries by an average of 9%. This increase is expected to remain around the 2025 level. This information was revealed in Mercer’s Total Remuneration Survey, which included more than 1,500 companies in the country.
Which sectors will see maximum growth?
According to the survey, the highest salary increase can be seen in the manufacturing and engineering sector as well as the automobile sector. Both these sectors are expected to grow by an average of 9.5% in 2026. At the same time, Global Competency Centers (GCC) may see salary increases of around 9%.
Why is the salary increase trend stable?
According to Malti KS, Rewards Consulting Leader, Mercer India, this level of salary hike in India reflects a balanced economic environment. The economy is steady, but companies are cautious about spending. Along with this, the talent market is also stabilizing and the attrition rate is now under control.
Focused on rewards and incentives
The survey also revealed that companies are changing their reward packages. Now, instead of long-term benefits, more emphasis is being given to short-term incentives, so that good performing employees can be better motivated and retain them with the company.
Companies cautious about recruitment
Recruitment for 2026 is also cautious. While 43% of companies were planning to add new employees in 2024, this figure is expected to drop to 32% in 2026. At the same time, around 31% of companies have not yet made a decision on their recruitment plans, clearly indicating uncertainty about the future.
Attrition rate is decreasing
Another relief is that the attrition rate among the workforce is steadily decreasing. Voluntary attrition was 13.1% in 2023, falling to 6.4% in the first half of 2025. At the same time, the rate of forced layoffs also fell to 1.6%. Overall, salary increases are expected to be steady but balanced in 2026. Companies are working on better talent retention strategies while controlling costs, which seems to create a more stable and reliable environment for employees.