A survey analyses the behaviour of salary hikes for employees in the coming year
India Compensation Growth Outlook 2012 is a recent survey that extensively looks into the salary hikes and compensation expectations in the coming financial year across different sectors. With a participation of 2326 Indian companies spread across different fields, the survey shows a broad analysis of the behaviour of salary hikes in India Inc. According to the data collected, it is predicted that salary hikes shall witness a marginal drop in 2012-2013.
Vishal Bhargava, director, Right Step Consulting Pvt. Ltd., elaborates on how salary hikes and compensation are expected to fare in the coming year, "Most sectors in the economy are facing a sluggish growth and facing a challenge on business growth and profitability, and are therefore adopting a conservative approach on salaries in 2012. The survey reflects that most sectors are expected to give out marginally lower salary hikes at an average of 11.54 per cent in 2012 as against 11.89 per cent in 2011, exceptions being – medical-healthcare, automotive, pharmaceuticals, etc. where we expect salary hikes to be marginally better than last year."
But what are the reasons behind this dip in salary hikes? Bhargava answers, "Slowdown in India and continued weakness in global economies is the primary reason behind this situation. The estimated GDP growth rate in 2011-12 has come down to 6.9 per cent, which is significantly lower than expectations and also the 8.4 per cent level that was achieved in each of the preceding two years. Most sectors are facing pressure of lesser than expected growth in sales and this has resulted in pressure on major input costs; salary budgets for 2012–13 too are under this pressure. Also, a slower growth implies relatively lesser job opportunities and therefore lower attrition. In such a scenario, businesses decisions on salary hikes are driven more by basic hygiene factors like business financial performance and plan for next year, affordability & increase in cost of living, rather than fear of losing talent to competition."
Pavan Mahajan, executive vice president, Aspire Human Capital Management, tells us to stay optimistic and what should be done in such a scenario, "India can achieve higher economic growth if the global environment turns optimistic. Internally, the country's fiscal deficit target will hold the clue to how things pan out during FY2013. HR managers will have to look beyond salary hikes to meet employee expectations. Also, companies will have to innovatively structure compensation plans. When such compensation plans are directly tied to employee productivity, morale and productivity has higher priority. Lastly, letting the employees know that you care and not giving up on training is what a company can do to increase employee morale."
Thus, it can be seen that salary hikes are all set to take a hit in the coming months and it is essential that we hang around with a positive mindset in such times.
- Palak Bhatia