Employees in India are expected to get an average salary hike of just 10.3 per cent this year—the lowest the country has seen in a decade—as industries have been affected by the country’s poor economic scenario, says HR consultancy firm Aon Hewitt.
Reflecting the growth expectations of just 5 per cent, corporate India is expected to offer its employees an average salary rise of 10.3 per cent for 2013, which might further be revised downwards and may touch 9-9.5 per cent when the actual figure comes out, Aon Hewitt India Partner — Talent & Rewards Sandeep Chaudhary said.
“In sync with the economic outlook, 10.3 per cent increase is among the lowest the country has seen in a decade (barring the sub-prime crisis year),” Chaudhary told reporters here.
Chaudhary further added that “though business sentiment is strengthening on account of inflation reaching a three year low and stock markets rising upwards, the cautious streak is evident in the projected salary increase numbers.”
According to the 17th edition of the Annual Salary Increase Survey of Aon Hewitt, the projected increase in salary in India at 10.3 per cent is the fifth highest across the world.
Venezuela topped the chart with 25.6 per cent rise and Argentina is at the second position with 24.2 per cent, followed by Vietnam and Tanzania at 12.6 per cent and 10.6 per cent, respectively.
However key talent continues to get a disproportionate share with the average increase projected at 14.1 per cent.
“Cost consciousness and performance orientation are the key themes this year. Organisations are looking at compensation and productivity together and, hence, closely evaluating the return on compensation spent,” he said.
Attrition level remains high
Meanwhile, despite the poor economic growth rate of the country, attrition level continued to be very high as corporate India reported an average overall attrition of 19.3 per cent for 2012.
However, the attrition level is quite low for key talent, as the average attrition number for key talent in 2012 stood at 5.7 per cent, showing that organisations are reshaping their strategies to safeguard this talent group.
Sector-wise analysis
A sector-wise analysis shows that the pharmaceutical industry is likely to get the maximum hike of 13.5 per cent for 2013, while FMCG, 12.3 per cent.
“Wage inflation will be a high pressure point for sectors where wage cost is a significant part of operating expenses and revenues. Sectors where wage cost is relatively a small ticket item, the minimum fair pay increase will remain strong,” Chaudhary added.
The survey covered 500 organisations and measures actual and projected salary increases, and compensation practices.
The data for the survey were collected over December 2012 — January 2013.