With the coronavirus pandemic hitting the economy and hampering revenues of many companies, the average increment passed onto employees has also dropped as compared to 2019.
With the coronavirus pandemic hitting the economy and hampering revenues of many companies, the average increment passed onto employees has also dropped as compared to 2019. In fact, only 40% employers have hiked wages in 2020. “For 2020, average increment at 3.6% is less than half the increment of 8.6% that employees received in 2019. This number is among the lowest in decades,” according to a report by Deloitte Touche Tohmatsu India LLP. Further, only 23% of the surveyed companies in India said that they may hike wages in 2021, Deloitte report on salary increments, bonus payments, performance management, hiring, and other human resource practices in India, said.
Only a handful of companies have given increments of more than 10% in 2020. In fact, the proportion of companies which have given higher increments has dropped considerably since the start of the lockdown in March 2020. “If we only consider organisations that gave an increment, the average increment in 2020 is 7.5%,” the report said.
However, pay increases are not affected only because of coronavirus. In fact, they have been on a downward trend in India for sometime now. “Pay increases have been slowing in India over the past few years in line with the trajectory of the economy and rising margin pressures,” Anandorup Ghose, partner at DTTILLP, said. Coronavirus has aggravated the issue as it pulled the global economy into a recession. Companies usually go into cost-cutting when revenue inflow is hit hard.
Sector which hiked wages the most
While no industry has witnessed an average double-digit increment in 2020, salary hikes were the highest in the life sciences sector. The coronavirus blow is evident by the fact that e-commerce, which usually gives good hikes, has also struggled to match its past performance. Among sectors where hikes were the lowest are — manufacturing and services sectors such as real estate, construction, metals and mining, hospitality, retail, and automobiles industries etc.