Global professional services firm Aon, providing a broad range of risk, retirement and health solutions, today released the 23rd edition of its annual Salary Increase Survey in India. The study analyzed data across 1000+ companies from more than 20 industries.
As per the results of the survey, companies in India gave an average pay increase of 9.5% during 2018, reflecting improved business sentiment compared to 2017. The projections for 2019 are stable yet favourable at 9.7% as companies expect a positive economic outlook backed by high economic growth expectation, high domestic demand and low inflation. A decline in voluntary attrition and controlled incremental hiring continue to keep the sentiment mild.
Anandorup Ghose, Partner and Head Emerging Markets, Aon, commented, “Pay increases are marginally positive compared to earlier years – a big highlight is the reducing difference in pay increases across industries year on year. A lot of the pay increase decline is also reflected in the constant drop in voluntary attrition levels across industries.”
While there is an improvement in the overall increment projection, pay increase budgets across sectors are increasingly tending towards the overall average. Sectors projecting a double-digit increment have come down over the years with only five sectors projecting a double-digit increment for 2019. These include sectors such as Consumer Internet Companies, Professional Services, Life Sciences, Automotive and Consumer Products.
The increment projections in other sectors are also a reflection of the expected growth prospects during the year. With government focus on infrastructure investment, sectors such as cement, metal, engineering services saw a revival in demand and an improvement in increment projections for 2019.
While India Inc. saw a positive shift in increment percentages, attrition continues to maintain the downward trend. Attrition has declined from 18.5% in 2013 to 15.8% in 2018, indicating blunting the edge of the ‘push’ forces at work. At the same time, the ‘pull’ forces have abated as well with fewer industries attracting talent from the market.
In order to manage overall pay budgets, companies are re-looking at their hiring strategy and focusing on hiring key skills which will determine the success of the business over the longer term. As digitization becomes the new normal, companies are investing in these niche skills to stay relevant in the changing business scenario.
Anandorup Ghose added, “Every election year presents a set of interesting dynamics in how companies plan and execute on budgets – we expect this year to be no different. But we are fairly confident that the double digit pay increase days are well behind us as India Inc. shows maturity in managing economic and political cycles.”