Rising hopes on economic growth, low inflation likely to result in salary hikes of 9.7% across sectors this year

Average salary hikes will in the range of 9.7 percent this year, a marginal increase from last year. However, top performers can expect to get 15.6 percent hike as companies are focusing on performance and productivity. HR consultancy firm Aon’s annual report, Salary Increase Survey In India, survey predicts an average salary hike of 9.7 percent across industries as companies expect a positive economic outlook backed by high economic growth expectation, high domestic demand and low inflation. The study analysed data across 1000+ companies from more than 20 industries. Last year, the survey had projected an average salary increase of 9.5 percent. Continuing the trend, India continues to lead the Asia-Pacific region. Russia is expected to dole out a salary raise of 7.2 percent, South Africa 6.7 percent, Brazil 5.8 percent, the US 3.1 percent, Australia 3 percent and UK 2.9 percent.

The top five industries giving double digit increase are consumer internet companies, professional services, life sciences, consumer products, automotive/vehicle manufacturing, the report said. With government focus on infrastructure investment, sectors such as cement, metal, engineering services saw a revival in demand and an improvement in increment projections for 2019.

Besides, the differentiation in salary increases further widened this year to 1.9 times between top performer and average performer where the overall the top performer is expected to get an average salary hike of 15.6 percent. [caption id=“attachment_4328807” align=“alignleft” width=“380”]  Representative image. Reuters[/caption] The major point highlighted by the survey is – the reducing difference in pay increases across industries year on year. Anandorup Ghose, Partner and Head Emerging Markets, Aon, said, “Pay increases are marginally positive compared to earlier years—a big highlight is the reducing difference in pay increases across industries year on year. A lot of the pay increase decline is also reflected in the constant drop in voluntary attrition levels across industries.” On attrition, the survey said it has fallen steadily over the years from 18.1 in 2014-15 to 15.8 for 2018-19. However the involuntary attrition (lay offs) has gone up, prominently in the case of entry level. In order to manage overall pay budgets, companies are re-looking at their hiring strategy and focusing on hiring key skills which will determine the success of the business over the longer term. As digitisation becomes the new normal, companies are investing in these niche skills to stay relevant in the changing business scenario. Commenting on the impact of new government formation on salary hike,  Ghose said, “if positivity comes in the economy post election, regardless of how government performs, the positivity will last for next one year which will lead to higher pay increase for the next year.” The double digit pay increase days are well behind us, as India Inc shows maturity in managing economic and political cycles, Ghose said.