Salary hikes in 2014 to be lowest in a decade: Aon Hewitt
Salary hikes in India will average 10 per cent in 2014, the lowest in a decade, according to a survey of 565 companies conducted by global human resources firm Aon Hewitt. The survey did not take into account hikes in 2009, when the economy was struggling in the aftermath of the post-2008 global financial crisis.
According to survey, those working in pharma, engineering services and consumer goods can expect 10-12 per cent salary hikes for 2013-14 as wage costs represent a smaller percentage of the total cost structure for these companies.
Employees working in the IT sector (Hi-Tech industry) can expect an average salary increase of 10.2 per cent for 2014, with the hardware (semiconductor) industry leading at 11.3 per cent, closely followed by software products at 10.8 per cent. Salaries for Knowledge Process Outsourcing workers may jump 11.9 per cent on buoyant demand and investments.
However, those working in retail, financial services and hospitality sectors, where compensation costs are a significant portion of overall cost structure, may get less than 10 per cent hikes this year.
"These businesses have been impacted by the slowing down of the economy and consumer spending," the survey said.
Employees working in the auto sector are also likely to lag behind in salary hikes amid the unprecedented slowdown in the industry.
Though average hike may be at a decade-low, top performers are projected to receive an average 15.3 per cent hike in 2014, the survey found.
"In just the last five years, the percentage of employees in the top performance rating has dropped by 30 per cent, implying that organizations are not hesitating to differentiate sharply on the basis of performance and then allocate a disproportionate share of the total increase budget to top performers," the survey said.
According to the survey, variables make up 23 per cent of the total compensation of top management and even the lowest rung entry management gets approximately 12 per cent of their salary as variable compensation.
The average hikes for 2014 are marginally higher than projections made by Aon Hewitt in September 2013 reflection improving business confidence, positive expectations from the general elections and moderating inflation, the company said.
"Even though growth appears to be strengthening in both advanced and developing economies, it is expected to be muted and slower paced than in the pre-2008 era. This sentiment is reflected in India's slightly higher salary increase projections for 2014," said Anandorup Ghose, rewards consulting practice leader at Aon Hewitt India.
(The Aon Hewitt survey measured actual and projected salary increases, and compensation practices for five specific job categories, namely top/senior management, middle management, junior manager/professional/ supervisor, staff and manual workforce. The data for the survey was collected over December 2013 - January 2014.)