Slowdown in the economy is reflected in subdued salary increase projections in the country. The 24th annual Salary Increase Survey by professional services firm Aon finds that companies in India will give an average pay hike of 9.1 per cent in 2020, the lowest in the decade. Companies in India gave an average pay increase of 9.3 per cent during 2019.
The study analysed data across 1,000-plus companies from more than 20 industries.
Despite the dip in the projections, majority (42 per cent of the organisations) are projecting salary increase in the range of 8-10 per cent.
Even companies who are projecting a decline in revenues in 2020 over 2019 are looking at offering an 8.1 per cent salary increase showing how they want to offer market salary increase to keep talent engaged and reduce attrition.
Despite the gloomy outlook, India still leads the way for salary increase in the Asia-Pacific (APAC) region. After India, the second in line is China with projected salary hikes at 6.3 per cent, followed by Philippines at 5.8 per cent. As for any developed economy, the lowest salary hikes are in Japan at 2.4 per cent.
"Despite economic challenges in 2019, organizations in India are taking a positive view. Pay increases in India continue to be the highest in the region. A big reason for India's higher salary increase, as compared to other growing economies, is the high inflation rate and the war for key talent and niche skills," said Tzeitel Fernandes, Partner, Rewards Solutions at Aon.
Unsurprisingly, the Automotive/Vehicle Manufacturing industry reported the biggest drop (from 10.1 per cent in 2018 to 8.3 per cent for 2020). This is fairly similar to the real estate industry that is offering 8.3 per cent salary hikes. Pay increase is also impacted in transportation, at 7.6 per cent, due to trade wars and coronavirus.
But, the industry is still rewarding top performers. The top 10 percentile of performers are getting a 12 per cent hike while bottom most get a 7 per cent increase in pay. People who exceed expectations are getting a 14.6 per cent hike whereas the moderate worker is getting 8.3 per cent.
Navneet Rattan, Director, Organisation, Performance and Rewards, Aon India, said, "We see a reduction in the differences between pay increases across industries, with 85 per cent of the organisations projecting between 7-11 per cent - a sign of maturing business ecosystems. However, the premium for high performance and new age skills continues to rise."