57% Gen Z want better pay for key skills as workplace shifts rapidly
Mercer's Global Talent Trends 2026 report shows that Gen Z workers in India are increasingly linking pay to skills in demand. At the same time, companies are rapidly redesigning workplaces around AI, as trust and fairness concerns grows among employees.
Indian workplaces are undergoing a sharp shift as AI adoption, restructuring, and skills-based hiring reshape careers. According to Mercer’s Global Talent Trends 2026 report, 57% of Gen Z employees in India now want higher pay for critical and in-demand skills.
The report highlighted a growing disconnect between fast-changing organisational systems and rising employee expectations around compensation, fairness, and growth.
The findings were based on responses from nearly 12,000 global participants, including 650 from India.
Indian companies, the report said, are moving faster than global peers in adopting AI-led transformation. About 54% of C-suite leaders in India expect AI to drive major business transformation in the next two years, compared with 42% globally.
Alongside this, 66% of HR leaders are already planning to redesign jobs to improve human and machine collaboration, signalling a major structural shift in how work is organised.
AI OPTIMISM VS WORKER FEAR
While leadership optimism around AI is strong, employees are far more cautious. Mercer found that 79% of workers trust their organisations to reskill them if jobs change due to AI.
However, 75% are worried that AI could increase workplace monitoring and surveillance.
At the same time, 69% of employees believe AI’s most valuable role should be identifying upskilling opportunities rather than tracking performance.
This contrast shows a growing trust gap between employers and employees as digital tools become more deeply embedded in daily work life across Indian companies.
GEN Z AND THE PAY PUSH
Gen Z is at the centre of this shift, not just because of their numbers but because of their expectations.
With 43% of India’s workforce belonging to Gen Z, their demands are reshaping organisational priorities.
Alongside the 57% who want higher pay for critical skills, 54% of employees also fear their existing skills may become outdated in a rapidly changing job market.
PAY EQUITY AND RETENTION PRESSURE
Retention is becoming increasingly linked to compensation fairness.
The report found that 54% of employees are considering leaving their jobs for better pay, while 44% feel they are underpaid. Additionally, 37% want assurance of equal pay for similar roles.
In response, 57% of HR leaders plan to close pay gaps between new hires and long-tenured employees, reflecting growing pressure to improve pay transparency and equity across organisations.
SKILLS-DRIVEN WORKFORCE SHIFT
The move towards skills-based hiring is accelerating in India.
Mercer noted that 74% of C-suite leaders rank skills-driven workforce practices as a top priority, higher than the global average of 63%.
While talent scarcity is relatively lower in India at 42%, organisations are still aggressively shifting towards capability-based systems to stay competitive in an AI-driven economy.
FLATTENING WORKPLACES AND AGILITY PUSH
Organisational structures are also being redesigned for speed and flexibility.
Around 80% of leaders aim to simplify reporting lines, 76% want flatter hierarchies, and 64% plan to introduce self-organising teams.
Gen Z’s presence, making up 43% of the workforce, is pushing this shift further.
However, only 45% of employees feel their feedback leads to real change, highlighting a gap between structural reform and lived workplace experience.