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India to see a 10 per cent salary increase in 2020: Willis Towers Watson Survey

Our Bureau New Delhi | Updated on November 05, 2019 Published on November 05, 2019

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Energy sector and financial services to see highest jumps; handouts to be more as variable pay

Despite slowdown scares,  news of mounting job losses, and fears of salary cuts, there is some cheer on the wage front if  the forecasts in Willis Towers Watson’s Salary Budget Planning Report turn out correct.

Salaries in India are projected to rise 10 per cent in 2020, marginally higher than the actual increase (9.9 per cent) in 2019, says the latest Q3 2019 Salary Budget Planning Report released by the global advisory, broking and solutions company.

The report looks at a range of job grades across various industry sectors and is designed to provide companies with guidance for their annual salary forecasting for the year ahead.  The Q3 survey was conducted in July 2019 with 4,521 sets of responses received from 1,128 companies across 20 markets in Asia Pacific, including 337 from India.

At 10 per cent increase, India is doling out the highest hikes in the Asia Pacific region. Indonesia is projected at 8 per cent, China at 6.5 per cent, Philippines at 6 per cent, Hong Kong and Singapore both at 4 per cent.

Sectoral break up

While most sectors like General Industry, Chemical, High Tech and Pharmaceuticalscan expect salary increases around average mark of 10 per cent, Energy, Financial Servicesand Consumer Products sector stand out for the highest year on year growth. The Energy sector is expected to see a jump from 8.5 per cent in 2019 to 9.3 per cent in 2020, the Financial Services is projected at 9.7 per cent in 2020 from 9 per cent last year and the Consumer Products sectors is expected to see an increase from 9.5 per cent in 2019 to 9.9 per cent in 2020.

Which levels are seeing most hikes?

Median salary increase at the Executive level for 2020 is projected at 10.1 per cent, a noteworthy increase from 9.6 per cent in the previous year. For Middle Management, Professional and Support Staff, an increase from10.1  per cent in 2019 to 10.4 per cent in 2020 is projected. The employee group of Production Manual Labour is also projected to receive a higher salary increase of 10.3 per cent as compared to 10 per cent last year.

Highlighting a continued shift towards variable pay, especially at senior management levels, the survey found that actual variable pay at executive level increased from 20.7 per cent in 2018, to 30.7 per cent in 2019.

Arvind Usretay, Director, Rewards, Willis Towers Watson India said, “Attracting and retaining the right talent at leadership positions is commanding higher pay increases as the leadership pool continues to be limited. The increase is mostly in terms of variable pay as there is greater focus on pay for performance.”

Performance pays

On salary increases by performance levels, the survey found that on an average, 25 per cent of the salary increase budget is being allocated to top performers, which represents 11.5 per cent of employees in India. This implies that for each INR 1 allocated to an average or below-average performer, INR 2.16 is allocated to a top performer compared to about INR 1.3 last year.

“While compensation continues to be an important element, we are seeing a quiet re-emergence of ‘employee benefits’underway. If the last decade was about compensation being the key differentiator, the next could well be about ‘purpose led benefits’. With the employee now seen as a consumer, benefits will expectedly become more segmented, flexible and targeted,” said Usretay.

Hiring to remain subdued

The survey shows that only 22 per cent of theorganisationsin India plan to add new headcount compared to 29 per cent last year. Organisations planning to maintain their current headcount increased from 63 per cent in 2018 to 70 per cent in 2019; while,7 per cent plan to reduce headcount as compared to 8 per cent last year.

Hiring has been stable across sectors like Tech, Shared Service Outsourcing, Pharmaceuticals, Energy, Retail and Chemicals, while Captives continue to ramp up and expand with newer lines being introduced or insourced into the India operations. However, hiring has slowed down markedly for Automobile, Auto Ancillary and Engineering.

Published on November 05, 2019
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