Companies in India doled out an average salary increase of 6.1 per cent this year, the lowest in more than a decade, amid the coronavirus-induced economic slowdown but are expected to give a pay hike of 7.3 per cent in 2021, says a survey.
The survey by leading global professional services firm Aon plc on Wednesday showed organisations in the country have shown tremendous resilience despite the COVID-19 challenges and are betting on recovery. As many as 87 per cent companies plan to give salary increases in 2021 compared to 71 per cent in 2020.
According to the survey, companies in India gave an average pay increase of 6.1 per cent during 2020, the lowest since 2009 when the average was 6.3 per cent. The latest Salary Trends Survey in India also noted that companies in India will give an average pay hike of 7.3 per cent in 2021.
As per the findings based on an analysis of data across 1,050 companies from more than 20 industries, as of September-October 2020, 87 per cent of surveyed companies said they intend to pay out salary increases in 2021 and 61 per cent of these organisations plan to offer increases between 5 per cent and 10 per cent.
In 2020, 71 per cent of companies provided salary increases and of this group, only 45 per cent gave hikes in the range of 5 to 10 per cent.
"This is a special year -- business leaders are putting investments in their employees and clients ahead of shareholder return. Despite the gravity of the COVID-19 pandemic in India and its deep impact on the economy, organisations in India have shown tremendous resilience and a mature view on talent," said Nitin Sethi, a partner at Aon and CEO of the firm's Performance and Rewards Solutions practice in India.
The survey also said that two-third of the companies either aim to provide similar or higher increments in 2021 compared to the increments offered in 2020.
Further, Sethi said "business and HR leaders made hard decisions in second and third quarters of 2020 and are now betting on the green shoots of improving consumer demand. They see the need to invest in talent as a critical part of their recovery and growth prospects".
The industries looking to provide the highest salary increases are High Technology (Hi Tech), Information Technology (IT), IT Enabled Services (ITeS), Life Sciences, E-commerce, Chemicals and Professional Services. Meanwhile, companies in the Hospitality, Retail and Real Estate/ Infrastructure industries, which had given very low increases in 2020, are projecting a higher increase for 2021, but still trail most other sectors.
"The impact of COVID-19 has been varied on different sectors and organisations. We see high differentials in salary increases -- both intra and inter-industry. "The difference between industries with highest increase to lowest increase hits 7.2 per cent points as compared to mere 2.4 per cent points in 2019," said Navneet Rattan, Director at Aon in India's Performance and Rewards Solutions practice.