If you are looking to change job this year, there's something really important that you need to know. Companies are not willing to dole out double digit hikes, and salary increase this year may be just 9.4 per cent, according to the latest Aon Salary Increase Survey. Here again, a top performer may get a salary increase of 15.4 per cent, but the average or medium performers will have to be content with a 9.4 per cent or even less.
Over the years, with increasing pressure on compensation budgets, there is an emerging focus on rationalisation of budgets. HR budgets are being realigned towards top performers as opposed to the broader population.
While the period between 2007-2016 was the era of double digit growth in salary, it seems to have ended now. For this year and henceforth, single digit hike may be the norm.
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However, the salary increase in India is the highest among APAC nations. In China, for example, the projected salary increase is just about 6.7 per cent and in Japan, 2.5 per cent.
As the economy is maturing, India is increasingly reflecting the West in terms of co-relation with GDP. The ratio between salary increase and GDP growth rate has always been 1.2X-1.4X for major global economies of the world. Also, high inflation has contracted real wage hikes.
Sectors such as professional services, consumer internet companies, life sciences, automotive and consumer products continue to project a double digit salary increase for 2018. Consumer internet companies however, have seen a significant drop of 250 basis points over the past three years, from 12.9 per cent to 10.4 per cent, projected for 2018.
Interestingly, the Hi-Tech/information technology sector, which has gone through a spate of upheavals in recent times, is projecting an average hike of 9.5 per cent in 2018, whereas the third party IT services, which provide majority of the employment in India, are projecting an average hike of 6.2 per cent.
“Pay increases are becoming more nuanced. We are increasingly seeing a multitude of factors impacting salary increases such as size of the company, business dynamics within the sub industry, nature of talent requirements and quite obviously, performance", said Anandorup Ghose, partner at Aon India Consulting.
Attrition levels have declined across sectors, which is reflective of the general economic scenario and the fact that job creation has definitely come down.