Though the industry is hoping to achieve a better growth in 2018, your salaries are not going anywhere. Willis Towers Watson predicts that at 10 per cent, 2018 will see salary hikes similar to this year and slightly lower than 2016 and 2015. There is also a likelihood of India Inc providing average single digit increments. The only silver lining is that Indian salary hikes are better than some of the key markets in the Asia Pacific region.
For 2017 Towers Watson had predicted 10 per cent rise in salaries and the actual salaries too rose at the same rate. Though for 2016 and 2015, the agency predicted 10.8 per cent hike in salaries, the actual hikes were slightly lower.
“Given the decreasing pattern in year-on-year salary increases, Indian employees could very well see a single digit salary increase in 2018 for the first time since 2011. Given this trend and the rapid evolution of jobs, skill and the future of work, especially for tech-savvy talent, requires firms to rethink their talent attraction and retention strategies and realise that simply increasing compensation is not a sustainable solution,” Sambhav Rakyan (data services practice leader - Asia Pacific) at Willis Towers Watson said.
Among different sectors, energy, FMCG and retail sectors have slightly higher projections of around 10.5 per cent. Media too will see 10.4 per cent salary increments. In case of energy, there is a focus on the reforms in the renewable energy sector. In the retail sector, the convergence of online and offline retail will lead to higher increments. Financial Services, which have been adding new jobs last year and this year and even during demonetization, will not be generous enough when it comes to increments. At an average the increments will be around 9.1 per cent. Technology sector will maintain the increments at 10 per cent similar to previous years. “Given the labour arbitrage advantage, segments such as back office operations based out of India may offer above average increases. Start-ups and smaller MNCs are also likely to offer above average salary increases to attract and retain critical skill employees,” said Rakyan.
Executive salaries have plateaued and in some cases show a downward trend. In the mid-management level, the salary increase range is wide from a 2-3 per cent for average performers to 15 per cent for top performers. The junior management salary increases will average around 10 per cent but may have a wider range. Salary allocation for top performers in 2017 increased to 39 per cent up from last year’s 38 per cent. On the other hand, the budget set aside for average performance budgets decreased by 1 per cent to 27 per cent.
“Salary budgets get tighter and it still reflects the sentiment of employers to reward top performers. Therefore, now we see more companies relying on robust processes, governance and training at driving linkages between performance and pay. We expect this trend to gather greater momentum in the next couple of years as companies sharpen their pay for performance policies,” said Arvind Usretay, Director - Rewards - Willis Towers Watson India.
Nevertheless, India’s projected salary for 2018 is still the highest in the Asia Pacific region. Indonesia's salary hike is projected at 8.5 per cent, China at 7 per cent, Philippines at 6 per cent, and Hong Kong and Singapore at 4 per cent.