Indian employers are expected to shell out an average salary hike of
10.8% to their staff in 2016 despite being less upbeat on the business
outlook, but the inflation will end up eroding much of the increments,
says a Towers Watson report.
According to the Towers Watson 2015-16 Asia-Pacific Salary Budget
Planning Report, “India is expected to see an overall projected salary
increase of 10.8%. Factoring inflation at 6.1%, the net salary increase
in 2016 is expected to be marginally higher at 4.7% as against 4.5% last
year, when inflation was at 5.9%.”
The projected higher overall salary increases are despite the fact
that around 58% employers in the third quarter are less upbeat on the
business outlook for India than they were in the first quarter, the
report said.
“Companies need to be smart about how they use limited salary
budgets, because high volatility and talent crunches are causing
frequent shifts to pay,” Sambhav Rakyan, Data Services practice leader
Asia Pacific at Towers Watson, said.
“Employers may be bearish in thinking there is a weak business
outlook given the current poor market data, but the case is the opposite
for employees, who hold bullish expectations for salary rises.
Employers will need to carefully manage employees’ longer term
expectations, if they are to achieve a content workforce,” Rakyan added.
Meanwhile, across employee levels, the “top performers” are likely to
get higher increases averaging 12.5%, while “above average” and
“average” performers may get 11% and 9.7% raises, respectively.
“To reward employees based on their performance, offers them a great
incentive and also reflects growing market maturity. It also shows
rising competition for talent,” he said.
Sector-wise, the energy sector has the highest actual projected
salary increase in 2016 at 11.5%, followed by the high tech sector at
10.7%. While for the financial services sector, which has traditionally
seen higher pay increases, it would be a modest 10.4%.
Meanwhile, salary budgets in APAC region are set to rise 6.8% in
2016, higher than 6.6% in 2015. But once inflation is factored in,
average increases will be 3.4% next year, compared to 4.1% this year.
The survey noted that in 17 of the 22 Asia Pacific markets covered by
the survey, employees will go home with less money next year.
In East and Southeast Asia, the biggest overall increases for 2016
will be in Vietnam (10.4%), Indonesia (9.4%) and mainland China (8%)--
all higher than last year.
However, once the inflation is taken into account, real increases in these countries drop to 3.9%, 5.6% and 5.8% respectively.
by PTI, New Delhi
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