Average employee salaries in India are set for a median increase of 9 per cent in 2026, a report said on Wednesday, noting individual performance, position in the salary range, inflation and the organisation's competitiveness in the job market as major factors behind the development.
In addition to this, Mercer, a business of Marsh McLennan, stated in its report that organisations in India are shifting toward broader, more holistic value propositions, which are becoming central to how employers differentiate themselves in a competitive job market.
The report revealed that organisations are continuing to refine their rewards packages, with a focus on short-term incentives, moving toward more transparent, skills acquisition and deployment-based systems.
These actions reflect a strategic effort to balance cost discipline with the need to attract and retain high-impact talent.
Short-term incentives like bonuses have led to a stronger emphasis on near-term performance alignment, cost efficiency, and building transparent, skills-based pay frameworks to support evolving workforce needs in the face of AI and productivity priorities.
Adding to this, implementation of newly approved Labour Codes will tighten the social security net as well as preventive health care, at large, the report highlighted.
Malathi KS, Mercer's Rewards Consulting Leader in India, said, "Our survey shows most organisations in India will continue to plan pay increases in line with balancing cost pressures and talent retention."
Alongside this, there is a growing emphasis on skills-based organisation architecture, talent assessments to better align workforce capabilities with evolving business needs and pay programs to drive desired outcomes, KS added.
As per the report, the high-tech and the automotive industry are set to have the highest salary increases in 2026 at 9.3 per cent and 9.5 per cent, respectively.
"As India embraces digital transformation, navigates shifting workforce expectations and sharpens its focus on productivity, revisiting the number of employees eligible to receive an increment is a strategy being adopted by some companies to manage cost," Mansee Singhal, Mercer's Career Business Leader, said.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
