For salaried professionals resigned to their fate in the post-COVID-19 flux at the workspace, there is good news in store. Reflecting upbeat business sentiment despite the ravages of the pandemic over the past one year or so, India Inc. is set for across-the-board pay hikes this year.
As many as 88 per cent of Indian companies plan to increase the salaries of their workforces. The salary hike itself is decent enough at 7.7 per cent overall, though this will obviously fluctuate between sectors, job posts, companies and even locations and working arrangements.
The figures are insights gleaned from the much-awaited annual salary trends exercise by global HR and professional services biggie Aon, which were unveiled on Tuesday afternoon. It is the largest and most comprehensive salary survey conducted in the country, crunching data of more than 1,200 companies across 20 sectors.
Despite a tough 2020 with stringent lockdowns and the many uncertainties around it, which continue to cast a shadow on economic recovery, India is sticking to the trend of the past few years of having the highest salary increases among BRIC nations, according to the survey. In fact, the hike of 7.7 per cent expected in 2021 even beats out the 6.1 per cent of last year.
These figures, though, are way below the peaks seen in the boom years of the 2000s until the global financial meltdown of 2008-09. In the year 2008, the average salary increase in India was 13.3 per cent.
But there is scope for hope. Barely 12 per cent companies in the country said they will not be giving any increment in 2021. This number is less than half even of pre-COVID-19 sentiment from 2020, when the economic slowdown was a bigger worry and the coronavirus was but a blip on the radar.
Sector-wise, the big winners of the digital wave will continue to rule the roost in 2021. Ecommerce and similar venture capital-funded ventures will see the highest salary increases, of more than 10 per cent, and so would IT and tech companies, OTT and other entertainment avenues, as well as pharmaceuticals and life sciences.
Worst performing, as can only be expected after the pummelling they faced after COVID-19, would be areas like hotels and restaurants, real estate and infrastructure and retail. Even here, there is optimism galore that things are looking up. Hospitality (hotels and restaurants)—which had the lowest pay hikes in 2020, at 1.4 per cent—could see projected hikes go up as much as 5.5 per cent.
“Sectors that were adversely impacted by COVID-19 such as retail, hospitality and real estate, are projecting healthy increases in the range of 5-6 per cent,” pointed out Roopank Chaudhary, partner in Aon India's human capital business. “Such numbers reflect their intent to stay relevant and to control attrition, which had increased for these industries last year,” he added.
However, perhaps, you may want to hold on to popping that champagne bottle yet, for the increments may not be immediate, and may also not translate directly into cash in hand. “We expect the increment dynamics for 2021 to play out over a longer period of time given the uncertainty and potential impact of forthcoming changes,” warns Nitin Sethi, CEO (India & South Asia) of Aon. “The proposed definition of wages under the new Labour Codes could lead to... higher provisioning for benefit plans like gratuity, leave encashment and PF. We expect organisations to review their compensation budgets in the second half of the year once the exact financial impact of the Labour Codes is known,” Sethi said.