Nearly 87% of Indian firms are planning salary hikes in 20212 min read . Updated: 05 Nov 2020, 08:43 AM IST
- Industries like hi-tech, IT, life sciences, e-commerce are likely to offer the highest pay hikes, shows Aon survey
As many as 87% of Indian companies plan to raise employee salaries in 2021, up from 71% this year, underscoring optimism among India Inc. about a potential turnaround in fortunes after the widespread turbulence caused by the covid-19 pandemic.
These companies are expected to offer an average 7.3% salary hike to their employees in 2021, rising from a dismal 6.1% average increase this year, according to the India Salary Increase Trend Survey by global human resource consultancy Aon issued Wednesday.
The proportion of companies among those surveyed who will not offer any pay hike next year is likely to more than halve to nearly 14%, compared to the 29% of companies that did not hike pay this year.
Next year’s expected 7.3% increase would still be the lowest in 14 years excluding this year and 2008-2009 when the world was engulfed by the global financial crisis.
The survey, which collated data from more than 1,050 companies across 20 industries, said employees still won’t receive a high salary increase and only 47% are expected to offer more than 8% increment next year against 44% this year.
As of September-October 2020, 61% of the companies surveyed plan to offer salary increases between 5% and 10% next year. This compares with only 46% who issued 5%-10% increases this year, according to the Aon survey.
“Despite the gravity of the covid-19 pandemic in India and its deep impact on the economy, organizations in the country have shown tremendous resilience and a mature view on talent," said Nitin Sethi, a partner at Aon, and CEO of the firm’s performance and rewards solutions practice in India.
Industries that aim to offer the highest salary increases belong to the hi-tech, information technology (IT), IT Enabled Services (ITeS), life sciences, e-commerce, chemicals, and professional services sectors, as per the survey.
Companies in hospitality, retail, real estate, and infrastructure sectors will be laggards in raising employee salaries in 2021. Some of these sectors were among the worst hit by the pandemic.
“Business and human resource leaders made hard decisions in second and third quarters of 2020 and are now betting on the green shoots of improving consumer demand. They see the need to invest in talent as a critical part of their recovery and growth prospects," Sethi said.
Navneet Rattan, director at Aon in India’s performance and rewards solutions practice, said the impact of covid-19 has been “varied on different sectors and organizations.".
“We see high differentials in salary increases, both intra and inter-industry. The difference between industries with highest increase to lowest increase hits 7.2% points as compared to a mere 2.4% points in 2019," he said.
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