India Inc may hike pay by 9.7% this year: Aon Study
Despite 2019 being an election year in India, salary hikes are expected to be higher than 2018 at 9.7 percent. According to the annual salary increase report of professional services firm Aon, companies in India gave an average pay increase of 9.5 percent during 2018.
This survey analysed data across 1000+ companies from more than 20 industries. The projections for 2019 are stable yet favourable at 9.7 percent as companies expect a positive economic outlook backed by high economic growth expectation, high domestic demand and low inflation. A decline in voluntary attrition and controlled incremental hiring continue to keep the sentiment mild.
Anandorup Ghose, Partner and Head Emerging Markets, Aon, commented, “Pay increases are marginally positive compared to earlier years – a big highlight is a 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.”
While there is an improvement in the overall increment projection, pay increase budgets across sectors are increasingly tending towards the overall average. Sectors projecting a double-digit increment have come down over the years with only five sectors projecting a double-digit increment for 2019. These include sectors such as Consumer Internet Companies, Professional Services, Life Sciences, Automotive and Consumer Products.
1. Overall attrition rate has lowered from 18.1 in 2014-15 to 15.8 in 2018-19 which means less people are quitting jobs.
2. More people are getting sacked due to automation and cost management. While in 2014-15 it was 3.5 now it is 3.7 in 2018-19.
3. Incremental hiring is slowing down. While it was 24.5 in 2015-16 now it is 17.5 in 2018-19. The maximum impact has been at junior and clerical levels.
4. Compaines are shifting focus from mass hiring to employees with business critical skills.
The increment projections in other sectors are also a reflection of the expected growth prospects during the year. 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.
While India Inc. saw a positive shift in increment percentages, attrition continues to trend downward.
The survey said attrition has declined to 15.8 percent in 2018 from 18.5 percent in 2013. In order to manage overall pay budgets, Aon said companies are re-looking their hiring strategy and focusing on hiring key skills which will determine the success of the business over the longer term. The survey also said as digitisation becomes the new normal, companies are investing in these niche skills to stay relevant in the changing business scenario.
Souce : MoneyControl