Despite a tough economic environment, India will see a 10% rise in salaries in 2020, marking a marginal improvement from last year, says a new report. However, hiring is expected to slow down as companies take a cautious business approach.
According to Willis Towers Watson’s latest Salary Budget Planning Report, which looks at a range of job grades across sectors, companies have taken a cautious approach and don’t intend to make any significant changes in salary increases from the previous years. It also points out that though salary increases in India are stabilising around 10%, they still remain the highest in the Asia-Pacific region. In contrast, Indonesia will see an 8% rise in salaries, while China will see 6.5%, the Philippines 6%, and both Hong Kong and Singapore 4%, the Willis Towers Watson survey says.
“Companies are beginning to make selective skill-based compensation adjustments to cater to requirements around automation and digitisation,” says Rajul Mathur, consulting leader-talent and rewards, Willis Towers Watson India.
“Going forward, organisations should continue to re-examine the alignment between their business and talent strategies, as well as how to remunerate and reward different segments of the workforce considering their core contribution to business success,” he adds.
The survey also shows that only 22% of organisations in India plan to add new headcount, compared to 29% last year, as businesses take a cautious approach to hiring. And the number of organisations planning to maintain their current headcount increased to 70% this year, from 63% last year. This year, 7% of the organisations surveyed plan to reduce their headcount, compared to 8% last year.
Willis Towers Watson also says that hiring has been stable in sectors such as high tech, energy, retail, chemicals, and pharma, whereas auto, auto ancillaries, and engineering have seen a slowdown.
The top gainers in terms of salary increases will be employees in sectors such as general industry, chemicals, high tech, and pharmaceuticals, who are expected to see an average rise of 10% in salaries. The energy sector is expected to see a rise of 9.3% in salaries in 2020, from 8.5% in 2019; the financial services sector will see an increase of 9.7% in 2020, from 9% last year. Consumer product sectors will see an increase of 9.9% in 2020, from 9.5% in 2019.
The median salary increase at the executive level is expected to be at 10.1%, up from 9.6% last year. Middle management, professional, and support staff salaries are seen rising marginally to 10.4% in 2020. The survey also says that there is a continued shift towards variable pay, especially at senior management levels, with actual variable pay at the executive level jumping to 30.7% in 2019 from 20.7 % in 2018.
The survey was conducted in July with 4,521 sets of responses received from 1,128 companies across 20 markets in the Asia-Pacific, including 337 from India.