India Inc. employees are projected to get a 6.4 per cent average pay hike in 2021, but best performers are likely to get a 20.6 per cent increment in the upcoming appraisal season, according to a salary projection survey released by global consulting and advisory firm Willis Towers Watson.
Amongst sectors, consumer products, and high-tech companies are pegged to offer higher increments, however, energy and business process outsourcing sectors are projected to give the least hike.
"High tech, pharmaceuticals, and consumer products and retail project a median salary increase of around 8 per cent, which is more than the general industry projection. The financial services and manufacturing sector projects a 7 per cent increase in 2021, while the BPO sector is at 6 per cent. The energy sector is expected to see the lowest increase of 4.6 per cent," according to Willis Towers Watson's latest Salary Budget Planning report.
"Salaries in India are projected to rise by an average of 6.4 per cent in 2021 (translating to a median increase of 7 per cent)," the survey notes, adding that the 6.4 per cent projection for 2021 is marginally higher than the average actual increase of 5.9 per cent in 2020.
The report further shows that although the business environment and sentiment has improved, this may not translate to recruiting more people in 2021 by a large group of employers.
"As companies in India respond to the economic implications of the COVID-19 crisis, there is an increased optimism on business recovery, but it is yet to translate into the salary increment budget," says Rajul Mathur, Consulting Head Talent & Rewards, Willis Towers Watson India.
Mathur further said that with compensation budgets lower than previous years, companies are likely to prioritise allocation towards protecting critical and highly skilled talent. "Through 2021, we can continue to expect a greater emphasis on pay for performance and pay linked to business output," Mathur adds.
As per the survey, on average, 20.6 per cent of the salary increase budget is being allocated to top performers, which represent 10.3 per cent of the employees in India.
"This implies that for each Rs 1 allocated to an average performer, Rs 2.35 is allocated to a top performer and Rs 1.25 is allocated to an above-average performer," the survey says.
The survey further notes that median salary increase at the executive level for 2021 is projected at 7 per cent, a slight decline from 7.1 per cent in the previous year.
For middle management, professional, and support staff, a decrease from 7.5 per cent in 2020 to 7.3 per cent in 2021 is projected.
The Salary Budget Planning Report is compiled by Willis Towers Watson's Data Services Practice. The survey was conducted online in October/November 2020 and received over 18,000 sets of responses covering over 130 countries worldwide.
A comparison of projected salary increases across key markets in Asia Pacific this year shows that Indonesia is projected at 6.5 per cent, China at 6 per cent, the Philippines at 5 per cent, Singapore at 3.5 per cent, and Hong Kong at 3 per cent.
Of the surveyed companies in India, 37 per cent have projected a positive business revenue outlook for the next 12 months, up from 18 per cent in Q3 2020. However, recruitment is yet to pick up.
The study shows that only 10 per cent of the organisations in India plan to add new headcount compared to 14 per cent last quarter.
"All sectors witnessed varying levels of impact due to COVID-19. Some sectors such as hospitality, aviation, travel, and tourism were hit harder than the others. Sectors such as pharma, FMCG, e-commerce, and high-tech have experienced growth and this is reflective of their hiring plans and salary budgets for 2021," says Arvind Usretay, Director, Rewards, Willis Towers Watson India.
Copyright©2022 Living Media India Limited. For reprint rights: Syndications Today