Salaries in India are projected to rise by an average of 6.4 percent in 2021 (translating to a median increase of seven percent), according to Willis Towers Watson’s latest Salary Budget Planning Survey report. This is marginally higher than the average actual increase of 5.9 percent in 2020. The report looks at a range of job grades across various industry sectors and is designed to provide companies with guidance for their annual salary forecasting for the year ahead.
A comparison of projected salary increases across key markets in the Asia Pacific this year shows that Indonesia is projected at 6.5 percent, China at 6.0 percent, the Philippines at five percent, Singapore at 3.5 percent, and Hong Kong at three percent.
Of the surveyed companies in India, 37 percent have projected a positive business revenue outlook for the next 12 months, up from 18 percent in Q3 2020.
Despite a comparatively optimistic projected business outlook, recruitment is yet to pick up. The study shows that only ten percent of the organizations in India plan to add a new headcount compared to 14 percent last quarter.
On average, 20.6 percent of the salary increase budget is being allocated to top performers, which represent 10.3 percent of the employees in India. this implies that for each ~ INR 1 allocated to an average performer, INR 2.35 is allocated to a top performer and INR 1.25 is allocated to an above-average performer.
Commenting on the findings, Rajul Mathur, Consulting Head – Talent & Rewards, Willis Towers Watson India said, “As companies in India respond to the economic implications of the COVID-19 crisis, there is an increased optimism on business recovery, but it is yet to translate into the salary increment budget. With compensation budgets lower than previous years, companies are likely to prioritize allocation towards protecting critical and high skilled talent. Through 2021, we can continue to expect a greater emphasis on pay for performance and pay linked to business output.”
High Tech, Pharmaceuticals and Consumer Products & Retail project a median salary increase of around eight percent, which is more than the General Industry projection. The Financial Services and Manufacturing sector projects a seven percent increase in 2021, while the BPO sector is at six percent. The Energy sector is expected to see the lowest increase of 4.6 percent.
Arvind Usretay, Director, Rewards, Willis Towers Watson India said, “All sectors witnessed varying levels of impact due to COVID-19. Some sectors such as hospitality, aviation, travel, and tourism were hit harder than the others. Sectors such as Pharma, FMCG, eCommerce, and High-tech have experienced growth and this is reflected in their hiring plans and salary budgets for 2021.”
The median salary increase at the Executive level for 2021 is projected at seven percent, a slight decline from 7.1 percent in the previous year. For Middle Management, Professional, and Support Staff, a decrease from 7.5 percent in 2020 to 7.3 percent in 2021 is projected. The employee group of Production Manual Labour is also expected to receive a lower salary increase of 7.2 percent as compared to 7.7 percent last year.
“Unprecedented change linked to an increasingly virtual work environment has brought to the fore the role of distributed leadership. Organizations should evolve structures to identify, recognize and reward leaders who have demonstrated the ability to lead change and positively impact engagement and productivity” added Mathur.