Salary Hike 2026: Good News for Employees, How Much Will Your Salary Increase?

Good news for private sector employees in India. The year 2026 is expected to bring healthy salary growth, according to a recent report by global consulting firm Mercer. The report predicts an average salary hike of around 9 percent across industries, making it one of the most promising years for employees in recent times.

Mercer Report 2026: What Does It Say?

According to Mercer’s ‘Total Remuneration Survey 2026’, Indian companies are shifting their compensation strategies. Instead of uniform annual increments, organizations are now focusing on:

Employee performance

Critical skills

Productivity-linked bonuses

Market competitiveness

The survey analyzed data from 1,500+ companies and 8,000+ job roles across India.

Salary Hike Trends: Performance Over Seniority

Mercer highlights that companies are moving away from equal pay hikes for all employees. Salary increments in 2026 will largely depend on:

Individual performance

Inflation impact

Business growth

Talent retention needs

Malathi K.S., Rewards Consulting Leader at Mercer India, stated that organizations are carefully balancing cost pressures while ensuring top performers are rewarded.

Skills & Bonuses Take Center Stage

Instead of increasing fixed salaries, companies are increasingly offering:

Performance-linked bonuses

Short-term incentives

Skill-based pay structures

Employees with high-demand and niche skills will receive higher compensation. Companies are also investing in career growth, learning opportunities, and better work experiences.

 

Sector-Wise Salary Hike Expectations in 2026

Some sectors are expected to witness higher-than-average salary hikes:

Automobile Industry

Expected hike: Up to 9.5% (highest among sectors)

 

High-Tech & Consulting

Expected hike: Up to 9.3%

IT, ITES & GCCs

Focus on employee well-being

Progressive HR policies

AI and digital skill incentives

Digital Transformation & AI Impact on Salaries

With rapid AI adoption and digital transformation, companies are redesigning reward systems to promote:

Agility

Transparency

Employee resilience

Professionals with AI, data, cloud, and digital skills are seeing significant salary premiums due to growing demand and limited supply.

 

New Labour Codes: How They Affect Pay Hikes

The implementation of new labour codes is also influencing salary structures. Increased costs related to:

Social security

Healthcare benefits

Compliance requirements

As a result, some companies may limit increments to high-performing employees while controlling overall payroll expenses.

Mansi Singhal, Mercer’s Career Business Leader, emphasized that this is the right time for organizations to build a high-performance culture by linking empowerment with accountability.

Final Takeaway

• Salary Hike 2026 looks positive, especially for skilled professionals and top performers.
• Performance, skills, and adaptability will matter more than tenure.
• Employees with future-ready skills, especially in AI and digital domains, will benefit the most.