As the slowdown in domestic business world continues, employees might have to see another year of poor appraisals. As per the survey by Aon Hewitt, Indian companies are expected to give an average 10 per cent salary hike in 2014, the lowest in last five years. In 2013, the average salary increase was 10.2 per cent while in 2009, it was 6.6 per cent.
According to the global human resource solution provider, the average salary increase for 2014 as projected by over 500 organisations in the country stood at 10 per cent, with a range of 8.8 per cent to 12 per cent across industries.
Unlike the double- digit hikes seen over the last decade, the report added that the years 2012- 14 will witness a slowdown. "This period reflects the easing off of the unsustainable, turbo-charged, pre-crisis economic growth. Even though growth appears to be strengthening in both advanced and developing economies, it is expected to be muted and slower paced than in the pre-2008 era," Aon Hewitt India Rewards Consulting Practice leader Anandorup Ghose said.
Sectors largely reliant on the domestic economy such as pharmaceuticals, chemicals, engineering services and consumer goods, project the highest salary increases, typically above 10 per cent for 2013-14. Retail, financial services and hospitality forecast a lower range of salary increases, with these businesses affected by the slowdown in the economy and consumer spending.
Globally, Venezuela projected the highest salary increase of 24.9 per cent, followed by Argentina with 24.3 per cent and Vietnam with 11.1 per cent hike. Continuing the trend of the previous few years, the developed economies of the United States, United Kingdom and Japan show salary increases in the range of 2.4 per cent to 3 per cent.
India leads salary increase projections across key Asia- Pacific countries, followed by China. Reasons for lower budgets include concerns over fluctuating economic conditions, cited by 57.6 per cent of the respondents. Some organisations are managing wage cost escalation by freezing hiring, transferring salary increases from fixed pay to variable pay and recruiting replacements at lower salaries. Interestingly, the pace of top management salary increases has been slowing over the past seven years.
Rewards for key talent are likely to continue. As against an overall salary rise of 10 per cent, key talent would get a 13.9 per cent salary hike this year, the report said. "Organisations are exercising prudence in overall salary increases but investment in key talent continues. Gap between salary increase awarded to key talent vs others is widening year-on-year," the report said.