In 2015-16, 6 out of 10 firms have suggested that there is an 'improving' outlook towards businesses in India. This number was 7 out of 10 in 2014-15. Is the optimism around the new government and improved business performance wearing off? Various research and surveys may suggest – yes, that is the case. However, this dip in the sentiment has not really impacted the salary increase projections for India Inc. in 2016.
India continues to lead the pack for Asia in salary increases – both 2015 and 2016 (projected). All leading APAC nations are also projecting a marginal improvement in salary increases over previous year.
- India projected an average increase of 10.6% for 2016. Overall manufacturing sector continues to give higher increases than services
- Junior management continues to report the maximum salary increase as compared to other employee categories (10.9%)
The decadal story of India reflects a sign of maturity. Irrespective of market sentiments, firms in India continue to adopt a cautious approach and do not get swayed away by market led good or not to encouraging news. While 2012, policy paralysis was at its highest and the market sentiment were low or 2015 – where there was the euphoria of a new government and promising future, India Inc. has chosen to stay fairly flat.
While India Inc. continues to be optimistic yet cautious – historical low base of salary and the need to stay competitive in the Asia Pacific region allows India to still continue to be the highest projecting country.
- In spite of adopting a cautious approach, firms still believe maintaining market competitiveness of pay levels and differentiation rewards for key talent are the top 2 rewards challenges
- As organizations try to move away from a socialistic approach, differentiating rewards for key talent and ensuring competitiveness in pay levels is increasingly topping the charts as a reward challenge
- At 1.7X, the year-on-year salary increase for top performers continues to increase
- Decline in salary increase for low performers is becoming the trend
- Services sector was observed to provide a greater differentiation to top raters as compared to manufacturing
Senior Consultant, Aon Hewitt