New Delhi: Economic growth may be slowing, and consumption and investment demand are yet to pick up, but corporate executives can expect decent salary jumps this year, recruitment consultants and human resource heads said.
Junior executives performing well may be rewarded with an increment of up to 20% while those in middle and top management are likely to earn 12-15% more. Even under-performers could end up with salary hikes of 5-8%, according to recruitment firms including PeopleStrong, GlobalHunt, and Michael Page.
“The top management compensation increments are lower than last three years. However, the long-term incentive plan (LTIP) component has been either added in many companies or the quantum has been increased. The long-term payouts are higher by 20-25%. We are witnessing a stronger pay-for- performance trend in the market,” said Puneet Pratap Singh, partner in charge at the Indian unit of recruitment firm Heidrick & Struggles International Inc.
The highest projected increments are expected to be in sectors such as financial technology (fintech), analytics, digital, healthcare, manufacturing, telecom, banking, financial services and insurance (BFSI) pharmaceuticals and allied sectors.
Multinational banks, packaged consumer goods, e-commerce, real estate, retail and logistics companies are expected to offer the lowest increments, experts said.
Across companies, the increase in salary budgets is likely to be smaller than last year because of a slowdown in economic growth following the invalidation of high-value banknotes and the consequent cash crunch.
The Economic Survey said the demonetisation exercise could slow GDP growth by 25-50 basis points in 2016-17 on the baseline growth assumption of 7%. One basis point is 0.01%.
“The projected salary budgets for 2017 will see increases that are marginally muted compared to 2016 actual increase levels largely because of the cautious sentiment in the economy,” Vishalli Dongrie, partner and head of people and change at KPMG, said.
According to Nabomita Mazumdar, who has the title of evangelist at Sheroes, a platform that helps women with their careers, in sectors such as supply chain and logistics, there won’t be any significant jump in salaries.
“Certain sectors such as pre-media and technology-based SMEs (small and medium enterprises) will remain conservative in terms of growth. They will hire in far lesser number and offer lesser salary hikes. Manufacturers of spare parts for automobiles will take time to stabilise. Hence even though there might be hiring to keep the production line strong, salaries are least likely to increase,” Mazumdar said.
Even so, the job market will see a significant revival in 2017, consultants say. According to human resource consulting firm Mercer’s 2016 India Total Remuneration Survey, released in December, 54% of companies it surveyed indicated that they will hire in the next 12 months, up from 48% last year.