India Inc is expected to dole out a 10 percent salary increase in 2014, the lowest in five years, according to a survey by Aon Hewitt.
New Delhi: India Inc is expected to dole out a 10 percent salary increase in 2014, the lowest in five years, according to a survey by Aon Hewitt.
In 2013, the average salary increase was 10.2 percent while in 2009, it was 6.6 percent.
According to the global human resource solution provider, the average salary increase for 2014 as projected by over 500 organisations in India stood at 10 percent, with a range of 8.8 percent to 12 percent across industries.
The years 2012-14 are witnessing a sort of "plateauing" in salary increases as compared to the high double-digit increases in the last decade, according to the report.
"This period reflects the easing off of the unsustainable, turbo-charged, pre-crisis economic growth. 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," Aon Hewitt India Rewards Consulting Practice Leader Anandorup Ghose said.
Sectors largely reliant on the domestic economy such as pharmaceuticals, chemicals, engineering services and consumer goods, project the highest salary increases, typically above 10 percent for 2013-14.
Retail, financial services and hospitality forecast a lower range of salary increases, with these businesses affected by the slowdown in the economy and consumer spending.
Globally, Venezuela projected the highest salary increase (24.9 percent), followed by Argentina (24.3 percent) and Vietnam (11.1 percent).
Continuing the trend of the previous few years, the developed economies of the US, the UK and Japan show salary increases in the range of 2.4 percent to 3 percent.
India leads salary increase projections across key APAC countries, followed by China.
Reasons for lower budgets include concerns over fluctuating economic conditions, cited by 57.6 percent of the respondents. A third (33.5 percent) said their organisation is undergoing cost reductions.
Some organisations are managing wage cost escalation by freezing hiring, transferring salary increases from fixed pay to variable pay and recruiting replacements at lower salaries.
Interestingly, the pace of top management salary increases has been slowing over the past seven years.
Rewards for key talent are likely to continue. As against an overall salary rise of 10 percent, key talent would get a 13.9 percent salary hike this year, the report said.
"Organisations are exercising prudence in overall salary increases but investment in key talent continues. Gap between salary increase awarded to key talent vs others is widening year-on-year," the report said.
Overall attrition reduced to 18.5 percent in 2013 from 19.3 percent on account of slow economic growth and limited job opportunities, the report said.