India Inc is tightening its purse strings — gone are the days of double-digit pay hikes. There will be an average pay hike of just 9.5 per cent across industries in 2017, according to projections made by Aon Hewitt, the global talent, retirement and health business of Aon.

While this is a dip from 2016 — when salary increases were in double-digit (10.2 per cent — India is still giving out the largest pay hike in Asia. Compared with Japan (2.4 per cent), Singapore (4.1 per cent) and China (6.9 per cent), Indian employers are still comparatively generous.

Said Anandorup Ghose, Partner at Aon Hewitt India, “India has highest inflation adjusted salary increase compared to rest of Asia. While the rest are averaging 2.5 per cent, India is getting 6 per cent.”

While traditionally pay increases in India have not been affected by inflation rates, the drop in Consumer Price Index over last quarters could have been a factor in compensation planning, notes the Aon Hewitt study. However, Ghose feels that despite demonetisation, Brexit and change in the US government, India Inc is handling external shocks with maturity. In 2009 when the global financial crisis gripped the world, pay hikes in India dropped to 6.6 per cent.

Even as the masses will see a drop in pay hike, key talent will be rewarded more. Pay differentiation between top and average performers has increased. Top performers could stand to get anywhere 15-18 per cent hike. However, the number of talent identified as top performers has seen a drop — just 7.5 per cent of the employee pool is segmented as high performing, the lowest number in the 21 years that Aon Hewitt has been doing its salary survey.

The study analysed data from over 1,000 companies and five levels of management. Conducted in end December 2016 and January 2017, it factors in the impact of demonetisation. Consumer internet companies are handing out highest hikes followed by firms in the life sciences business.

Related Topics
comment COMMENT NOW