Companies in India are likely to give an average salary increment of 7.8 per cent to employees for 2020, according to the inaugural edition of Deloitte India’s 2020 Workforce and Increment Trends Survey.
This projected salary increment is 40 basis points lower than the actual salary increment of 8.2 per cent that employees received in 2019.
"The decrease in salary increment budget is in line with the higher-margin pressure on companies, economic headwinds, and the need to gradually slowdown white-collar pay growth in India to become more globally competitive,"Deloitte said in a statement.
If the IT sector is excluded, headcount weighted projected pay increase drops further to 6.8 per cent. This implies that larger organisations are being more cautious with respect to salary increments.
Anandorup Ghose, Partner at Deloitte India, said, “There has been a lot of debate on pay increases over the past few years, and there is a need for greater responsibility in this process of salary budgeting as compensation cost ratios are increasingly becoming a sore point in boardrooms across the country. The talent market priorities are different from what they were five years ago, and our pay budgeting process and data need to reflect that.”
The study found that almost 50 per cent companies are projecting a salary increment of less than 8 per cent for 2020 and only 8 per cent companies are expecting to offer pay increases greater than 10 per cent.
The study found that, while at an all-India level, voluntary attrition slightly reduced in the current fiscal year to about 15 per cent, involuntary attrition (layoffs, restructuring, etc.) has increased to 20 per cent of the total attrition. Involuntary attrition increased the most in the automobile, insurance, and NBFC sectors. The survey findings also corroborated the increasing impact of automation on the workforce with companies showing reduced hiring levels.