Indian companies will lead the race in terms of salary hike in 2019, faring much better than their counterparts in the US, the UK, China and other Asian markets, a survey by human resources consultancy firm Aon said. In fact, the salary hike this time would be the highest since 2016 at 9.7 per cent compared to 9.5 per cent last year.
The salary hike by the companies in the US, the UK and China are projected at 3.1 per cent, 2.9 per cent and 6.5 per cent, respectively.
An overall positive economic growth, low inflation and a great demand have contributed to a substantial salary increment for India Inc's employees, although the hikes are nowhere close to the figures in the first half of decade when it reached a peak of 12.6 per cent in 2011.
Correspondingly, lower attrition rates (when the employees voluntarily leave the companies or retire from their services) and controlled hirings have affected the hike in salaries of the employees, the Aon survey, which was conducted across 1,000 companies in more than 20 sectors of India, said.
Who is going to benefit the most?
Unquestionably, India Inc has been pushed towards being performance-driven and would adequately reward those who have upgraded skill sets or are performing better than the average. In fact, the salary hike for the better-performing employees would be almost double than those of average, as per the AON survey.
Leading performers in Indian companies can expect a salary hike of up to 15.4 per cent, which is double the pay increase of an average performing employee.
Internet services companies would be the frontrunners in terms of salary hike and there is a likelihood of a double increment in salaries of the employees working in the sector. Those who have honed their skills in cybersecurity, automation intelligence and machine learning should expect a good pay hike.
The banking and other professional sectors such as life sciences, automotive and consumer products have also good news for their employees as their salary hike could be in double digits. For the IT services sector, the salary hike is slightly less.
Interestingly, the manufacturing sector is also pushing its way up in terms of pay hikes for its employees, although it is still behind the services industry. Post-2016, slower industrial growth and extensive digitisation have benefitted the services industry in India, as a result of which its employees are reaping the benefits.
The government's stress on Make in India may revive the manufacturing sector such as metal engineering, infrastructure, investment and cement industry.
The AON survey indicated that incentives based hikes would not be common in India Inc and may be restricted to the top management and higher ranking officials.
Layoffs still a concern?
The voluntary retirements/ attritions have witnessed an overall dip from 18.5 per cent in 2013 to 15.8 per cent in 2018, as per the survey, which slowed down the process of salary hikes of the Indian Inc employees. But the companies have fired employees (involuntary attrition) due to cost-cutting and automation.
The hiring process is also a little sluggish as the companies are setting aside their budgets for employee salaries and focussing on recruiting those who are well versed with the digitisation.