India Inc to record worst salary hike in six years

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Mumbai: India Inc will report a single digit increase in average salary, for the first time in the past six years. Salaries are expected to rise 8.2%, or lower, this year, down from 13.2% in 2008.

However, the dip notwithstanding, India will fare better than its immediate and extended neighbours. This, since the expected salary increase estimates continue to be the highest in the Asia Pacific region and among the highest globally, according to Hewitt Associates, a global human resources consulting firm that conducted a survey across 480 companies spanning various sectors.

Sandeep Chaudhary, leader, Hewitt's performance and rewards consulting practice, said, "Expectedly, salary increase projections have dipped when compared to previous years. Still, the Indian and Chinese economies are continuing to grow at greater than 7%, and salary increases in these markets will be among the highest globally. In fact, with inflation well below 5.5 %, an average increase of 8.2 % can be considered significantly healthy."

Salaries in China are expected to rise 8%, while salaries in the US are expected to see a 3.2% hike. Chaudhary, however, cautioned against taking such salary increases at face value. This, since lower salary increases in the US and other developed economies are taking place across a much broader base, which implies that even with the highest salary increases India will not match the developed economies in terms of hike levels.

Amidst global layoffs, less than 16% of domestic companies are considering retrenchment, over 60% companies are still hiring (though only select hiring), and 9 out of 10 companies are still giving promotions.

According to the Hewitt report, almost all employee levels will be impacted equally by the reduction in salary increase budgets, with the top management bearing the maximum impact (40%). Interestingly, employees at the junior manager, professional, and supervisor levels are expected to receive the highest increase for the ninth year in succession.

Pharma (13%), telecom (11.3%), FMCG (11%) and chemical (10.9%) are sectors expected to report the highest salary increases. The highest positive swing in salary increase seems to be happening in the hospitality sector (10.8%) which figured at the bottom of the salary increase list in 2008.