Reflecting a slowdown in the economy, Indian companies will offer a 9.1% increase in salaries to their employees in 2020, a 20-basis point fall from last year and the lowest in a decade. However, two of the five participating companies in the survey projected a double-digit increase in salaries and expected a positive economic outlook.
E-commerce and early-stage companies, and professional service providers will see the highest salary increase of 10%, while transportation and logistics firms will pay the lowest increments at 7.6%, according to the latest Aon Salary Increase Survey. More than 1,000 organisations across 20 industries participated in the survey.
In 2019, companies in India gave a slightly higher average pay increase of 9.3%.
“Despite economic challenges in 2019, organisations in India are taking a positive view. Pay increases in India continue to be the highest in the region. A big reason for India’s higher salary increase compared to other growing economies is the high inflation rate and the war for key talent and niche skills,” said Tzeitel Fernandes, Partner, Rewards Solutions, Aon, a professional services firm.
The auto sector, which is in the doldrums with falling sales for over a year now, will see the biggest drop to 8.3% average salary increase from 10.1% in 2018, according to the survey.
“We see a reduction in the differences between pay increases across industries, with 85% of the organisations projecting a hike between 7% and 11%—a sign of maturing business ecosystems. However, the premium for high performance and new-age skills continues to rise,” said Navneet Rattan, director, organisation, performance and rewards, Aon India.
The survey says pay increase budgets in 2020 are likely to be the lowest in a decade, but Indian organisations have still settled on a high single-digit salary increase, with 39% of the organisations projecting a double-digit increase. The average increase is also the highest among the Asia-Pacific countries.
Almost half of the organisations surveyed are projecting a salary increase in the range of 8%-10%, with junior management continuing to receive a higher salary increase compared to senior management, the survey added.
There has also been a marginal increase in attrition rate to 16.1% in 2019 from 15.8% in the previous year. Pay risk increased to 16.1% in 2019, up from 15.2% from a year ago.