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2026 Salary Hikes Cool: What to Expect
17 Dec
Summary
- Average salary increments have cooled significantly since 2021-2022.
- India's retail inflation has cooled, projected at 2% for FY26.
- New labour codes may increase costs for employers and reduce take-home pay.
Salary increments in India are projected to remain moderate in 2026, with estimates suggesting an average range of 8.5-9.5%. This cooling follows significant hiring activity and higher increments observed in 2021 and 2022, which saw hikes around 9.7% and 10.6% respectively. Recent years have seen a slight decrease, with averages around 9.3-9.7% in 2023 and 2024.
The current economic climate, characterized by steady inflation and a projected 2% inflation rate for FY26, offers less impetus for substantial raises. However, the implementation of new labour codes is expected to introduce additional expenses for companies, which may influence hike calculations. Sectors like pharmaceuticals and consumer goods are anticipated to offer slightly better increments compared to others.
While overall salary growth may be modest, employees at the minimum wage level could see higher increases of 14-15%. The new labour codes also bring potential changes to statutory deductions, affecting take-home salaries, and may increase social security contributions and operational costs for businesses, including mandatory health checks for older employees.
