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Employees at Indian companies can expect an average 11 per cent pay hike in 2014, according to a survey conducted by professional services company Towers Watson. However, after factoring in inflation, the rise would be just 2 per cent.
Taking inflation into account, Japan at 0.5 per cent and India at 2 per cent are among countries offering the smallest rises, while China and Vietnam lead the way with 4.9 per cent.
“Indian companies have traditionally offered high salary increases as compared to the rest of the region, but face a paradox today. They continue to offer double digit salary increases as they deal with the challenge of attracting and retaining critical talent, but high levels of inflation end up eroding much of this hike,” said Subeer Bakshi, Director, Talent & Rewards, Towers Watson India.
According to the survey, companies in Asia Pacific, including India, are finding it hard to both find and retain suitably skilled staff. One outcome of this is that more than 80 per cent of the companies surveyed in India say a larger portion of their salary budget increase allocation would go to high performers in 2014, the survey noted.
Sectoral budgets
The retail industry in India stands out with all respondents in the survey planning to allocate their budget to reward high performers.
Reflecting the continued challenges faced by the automotive industry in India, the survey found that 10 per cent of the companies anticipate a pay freeze in 2014, compared with the overall average of 1 per cent. Also, 11 per cent plan to allocate their entire salary budget increase only to high performers, in a bid to retain top talent.
Around 56 per cent respondents in the fast-moving consumer goods sector said a large portion of their budget towards salary increases would go to high performers, while 44 per cent said all employees would record the same increase in salary.
The survey was conducted in July and August 2013, with around 2,700 sets of responses from companies across 20 countries in the Asia Pacific region.
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