New Delhi: Workers in the world’s fastest growing economy are set to get the biggest salary hike in three years on expectations that economic growth in India will accelerate.

Average salaries in India are projected to rise 9.7% in 2019 from 9.5% in the previous year, according to human resource consulting firm Aon’s annual salary growth survey. That is still slower than the 12.6% growth in pay raises in 2011, the fastest in the past decade. In fact, salary hikes have been consistently faster than 10% in the seven years to 2016.

The pace of growth in salary hikes, however, slowed to 9.3% in 2017, as demonetisation in November 2016 and the implementation of the goods and services tax (GST) in the following year hurt business sentiment.

Workers in the consumer internet and professional services sectors are expected to get more than 11% pay raises this year, the Aon survey has found. In all, five sectors—life sciences, automotive, consumer products and the two cited above—are expected to offer employees double-digit increments in 2019.

(Mint)

“The salary growth this year is at a three-year high, but in actual terms it’s marginally up largely because of two factors: prudent expense management and, second, more differential pay structure based on performance," said Anandorup Ghose, partner and head (emerging markets) at Aon.

While double-digit average salary hikes may not return anytime soon, Ghose said high performers were likely to be rewarded. High performers may get 1.9 times the average pay hike, the survey says.

The Aon survey also found that employee turnover slowed to 15.8% in 2018 from 18.5% in 2013. At the same time, involuntary attrition, a euphemism for layoffs, has risen to 3.7% in 2018-19 from 3.1% in 2015-16.

The declining attrition rate, Ghose said, could be attributed to slower hiring growth in sectors such as e-commerce, internet, retail and insurance. The advent of automation and a focus on increasing utilization of employees also led to lower attrition rates, he added.

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Rising unemployment has become a major embarrassment for the Narendra Modi government, which came to power in 2014 promising to create millions of jobs a year.

According to the Aon survey, the salary growth gap between workers in manufacturing and services companies has been narrowing since 2016 and is now less than one percentage point on an average.

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