Employees in India can expect an average 10.6 per cent hike in their salaries, just a bit more than last year's 10 per cent—when it slipped to a decadal low—but may enjoy a higher 'real salary' raise if the latest edition of Annual Salary Increase Survey by Aon Hewitt is anything to go by.
This is because the consumer inflation numbers have significantly moderated almost halving from the near double digit rise in the previous year. Real salary hike is essentially the increase in salaries after factoring out inflation.
“On the back of improving business confidence, a stable government and moderating inflation there is a significant improvement in business confidence across companies. However, this confidence is not reflecting in salaries. The projected salary increase number shows a subtle improvement over salary increases in the last three years. Companies across industries are continuing to take a cautious stance and are not going for aggressive pay increases," said Anandorup Ghose, rewards consulting practice leader at Aon Hewitt India.
The closely watched survey brought out annually by the global talent, retirement and health solutions business of Aon plc, said nominal salary hike in real estate/infrastructure (12.2 per cent), life sciences (12 per cent) and media (11.8 per cent) would be higher than the average. The sectors such as engineering services and chemicals are also projected to have a higher than average increase in salaries.
Last year realty/infrastructure was among the lag sectors where salary hike was below the average. Pharma, chemicals and cement were the top three sectors in terms of projected salary hikes in 2014.
Retail and financial services will remain as last year, with lower than average salary hikes.
But IT and business process management sector has made a comeback, for the first time in three consecutive years; firms in this space are projected an average salary increase higher than the rest of India Inc.
Meanwhile, the top performers are expected to get 1.6 times the salary increase awarded to average performers as against 1.5 times last year.
“It’s heartening to see that even in good years India Inc is showing greater focus towards driving performance-based differentiation in pay budgets. This will enable companies to manage their compensation costs much better than they have been in the past. We are also seeing an increase in overall employee benefits costs for companies; there is a marginal but definite shift in the level of benefits being offered to employees," said Ghose.
The consulting firm analysed data from over 580 companies and says that almost 70 per cent of the respondents believe that there will be improvement in the business outlook. About half of all companies feel that positive business sentiment and increasing pay budgets in their competitive market are driving factors in their decision to increase salary projections from earlier years. Last year, 565 companies participated in the survey.
(Edited by Joby Puthuparampil Johnson)