India Inc Eyes 9% Median Salary Hike in 2026: Mercer
Performance, skills and market competitiveness to drive pay increases amid evolving reward strategies
- Median salary increase in India projected at 9% in 2026
- High-tech and automotive sectors to see highest hikes
- Firms shifting to skills-based, transparent pay frameworks
- Labour Codes to strengthen social security and healthcare cover
GG News Bureau
New Delhi, 18th Dec: Average employee salaries in India are projected to rise by a median of 9 per cent in 2026, driven by factors such as individual performance, inflation, position within salary bands and organisational competitiveness in the job market, according to a report released by Mercer on Wednesday.
The report by Mercer, a business of Marsh McLennan, noted that organisations across India are increasingly moving towards more holistic value propositions to differentiate themselves in an increasingly competitive talent landscape. Companies are refining their rewards strategies with a stronger focus on short-term incentives, transparency and skills-based pay systems.
According to the findings, short-term incentives such as bonuses are gaining prominence, aligning pay more closely with near-term performance, productivity goals and cost efficiency. Employers are also adopting skills acquisition and deployment-based compensation models to address changing workforce needs, particularly in the context of artificial intelligence and digital transformation.
The report highlighted that the implementation of newly approved Labour Codes is expected to further strengthen social security coverage and preventive healthcare benefits for employees across sectors.
“Our survey shows most organisations in India will continue to plan pay increases while balancing cost pressures and talent retention,” said Malathi KS, Rewards Consulting Leader at Mercer India. She added that companies are placing greater emphasis on skills-based organisational structures, talent assessments and pay programmes designed to drive specific business outcomes.
Sector-wise, the high-tech and automotive industries are expected to see the highest salary growth in 2026, with projected increases of 9.3 per cent and 9.5 per cent, respectively.
Mansee Singhal, Mercer’s Career Business Leader, said that as India advances in digital transformation and navigates shifting workforce expectations, some companies are also reassessing the number of employees eligible for increments as a cost-management strategy. “This approach reflects a sharper focus on productivity and sustainable growth,” she said.
The report underlines how Indian companies are recalibrating compensation strategies to remain competitive while adapting to evolving economic and workforce realities.
