Employees in India Inc can expect to see their pay increase by an average of 11 per cent in 2014, though after factoring in inflation the rise would be just 2 per cent, according to a survey conducted by professional services company Towers Watson.
Japan at 0.5 per cent and India at 2 per cent are among countries offering the smallest raises. Elsewhere in the region, Hong Kong and Singapore salaries are set to rise 4.5 per cent, Australia 4 per cent, the Philippines 6.9 per cent and Indonesia 9 per cent, discounting inflation.
Subeer Bakshi, Director – Talent & Rewards, Towers Watson India said, “Indian companies have traditionally offered high salary increases compared to the rest of the region, but face a paradox today. They continue to offer double digit salary increases as they deal with the challenge of attracting and retaining critical talent, but high levels of inflation end up eroding much of this hike.”
According to the survey, companies in the Asia-Pacific, including India, are finding it harder to both find and retain suitably skilled staff. One outcome of this is that more than 80 per cent of the companies surveyed in India say a larger portion of their salary budget increase allocation would go to high performers in 2014.
The retail industry in India particularly stands out with all respondents in the survey planning to allocate their budget to reward high performers.
Also, reflecting the continued challenges faced by the automotive industry in India, the survey finds that 10 per cent of the companies anticipate a pay freeze in 2014 compared to the overall average of 1 per cent. Furthermore, 11 per cent plan to allocate their entire salary budget increase to high performers, in a bid to retain top talent.
The FMCG sector plans to adopt a more uniform approach with 56 per cent saying a larger portion of their salary budget increase allocation would go to high performers and 44 per cent saying all employees would get the same increase.
“Our research clearly indicates that both employers and employees in India rank base pay among the top two retention drivers. Part of the solution lies in the articulation and execution of a strategically designed employee value proposition (EVP) – the give and get between employer and employee. Savvy employers will want to tackle the hard work of getting this right, because the benefits are demonstrable, significant and sustainable,” said Bakshi.
The survey was conducted in July and August 2013 with approximately 2,700 sets of responses from companies across 20 countries in the Asia-Pacific region.