Indian companies are not raising salaries as much as expected, because growth promises are yet to translate into reality, said a survey by Aon Hewitt.
Still, Indian employees will get higher raises than their peers in Asia, although that comes on a lower base. The average hike this year will be 10.6 percent in India, compared with employees in China who will get a raise of 8.6 percent.
That figure is driven higher by comparatively larger average hikes in salaries for real estate professionals at 12.2 percent, followed by life sciences at 12 percent and media at 11.8 percent. In all these sectors, expenses on salaries constitute a low percentage of overall costs, the survey says. Media, which traditionally has had lower average salaries, is now witnessing larger hikes particularly among those covering entertainment. From being at number 9 in the order of salary raises, it is now ranked much higher at 3.
High performers are likely to be awarded with about one and a half times the average hike in Indian companies, the survey said. That would make for a steeper bell curve for performance measured with salary growth.
The laggards, where salary hikes are among the lowest, are the hospitality, retail and financial services sectors, where the salary component as a percentage of total expenses is higher. Smaller percentage hikes are also the norm in sectors such as consumer goods where average salary levels are already higher than other sectors.
Majority of the companies surveyed, which make up 85 percent of the total market cap in India, said that they expect a better business environment under the current government. However they are yet to see the impact of policy initiatives. "Companies across industries are continuing to take a cautious stance and are not going for aggressive pay increases,” said Anandorup Ghose, Director, Talent and Rewards, Aon Hewitt India.
If Modi's policies and the upcoming budget lead to greater ease for doing business, higher raises might be in the offing. "We might see that happen around the same time next year," said Ghose.