New Delhi. There are countless problems related to money in the lives of working people. Go looking for one, you get 10. In such a situation, every year’s increment brings a sigh of relief for them. But according to a report, they are not going to get this happiness next year. According to the Salary and Attrition Trends report of HR consulting firm OMAM, the salary of employees will increase less next year. Besides, it has also been said in the report that the attrition rate will be higher than before. The average salary hike in 2026 is estimated to be 8.9 percent, which was 9.1 percent in 2025.
The report is based on a survey conducted between September and October 2025. It clearly showed that companies are tightening compensation budgets due to economic uncertainty, sector slowdown and different pay strategies. The pace of hike has slowed down the most in sectors like IT, e-commerce, FMCG, FMCD and auto sector.
Decline in hike from IT to FMCG
The average hike in the IT sector may come down to 7.0 percent in 2026, whereas it was 8.2 percent in 2025. Growth in e-commerce is expected to decline from 10.0 percent to 9.2 percent, and growth in FMCG and FMCD is expected to decline from 9.5 percent to 8.7 percent. The auto sector may also fall from 10.5 percent to 9.8 percent.
Similar softness is visible in the industrial and chemical sectors also. The industrial sector may fall from 9.0 percent to 8.7 percent and the chemical sector may fall from 9.5 percent to 9.0 percent. Of these, only the hike in the insurance sector is expected to remain stable at 9 percent. Telecom is the only sector where there is a slight increase in hike. In telecom it may increase from 9 percent to 9.1 percent.
New pay strategy of companies
It was told in the report that the main reason for the decrease in hike is the new compensation philosophy of the companies. Instead of giving equal hike to all employees, companies are now focusing more on top performers and employees with special skills. On the other hand, the hike for the general workforce is being kept flat. Additionally, many companies have now reached market-competitive pay levels, so a larger portion of the budget is being spent on total rewards rather than fixed pay. These include benefits, retention programs, upskilling incentives and career development.
Companies under pressure from economic environment
The report said that due to geopolitical tensions, global trade friction and ongoing supply chain turmoil, companies are planning more carefully. After moderation in inflation, companies are re-calibrating their compensation models and this has also put pressure on hikes. But despite the hike being less, there seems to be no reduction in attrition. The average attrition in 2026 is estimated to be 13.6 percent, with significant variations seen depending on the sector.
The churn is highest in the IT service sector where 1 in every 5 employees is thinking of changing jobs. Attrition in high-demand sectors like banking and financial services, retail and ecommerce could reach 17-18 percent. Major reasons for exit include low compensation, lack of career growth, work culture, lack of recognition and burnout.
How will companies retain talent?
The report clearly indicates that in future companies will depend less on fixed hikes and more on variable pay, performance-differentiation, internal mobility and upskilling based promotion. Its purpose is to somehow retain top and critical talent in the organization.
