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Waiting for a good pay hike? You will be disappointed

April 04, 2015 08:59 IST

For the past four years, average salary hikes in India have been around 10 per cent.

Employees expecting salary increments this financial year may be in for a disappointment. This appraisal season is likely to be muted with pay hikes in the range of 10 per cent. 

"Usually in a post-election year, there is a shift of 200 basis points (a basis point is a hundredth of a percentage point) in hikes from the previous year. However, this year it will only be 20 basis points," said Anandorup Ghose, practice leader, rewards, Aon Hewitt. 

For the past four years, average salary hikes in India have been around 10 per cent.

However, it was expected increments across the board would be higher following a resounding victory of the Bharatiya Janata Party in last year's general elections. 

Ghose said most sectors were taking a cautious stand until the impact of structural economic changes started bearing fruit. The momentum in manufacturing is low as new projects have not materialised and sales are slow. 

Some sectors like consumer goods will, however, see bigger pay hikes. A Mahendran, a veteran of the consumer goods industry who has now set up his own venture, said increments would be most likely in the region of about 11-12 per cent for most companies.

"The last financial year was better than the previous year, which is why companies should offer increments in that range," he said. 

Infotech will see a mixed appraisal season. Infosys said in March it would raise salaries by 6.5-9 per cent for its employees in India, effective Wednesday. For onsite employees, salaries would be raised by about 2 per cent. 

Shiva Sundar, human resources director, India, of the US-headquartered cloud services provider Akamai Technologies said 'pay for performance' was on the rise where top performers could expect raises of 18-20 per cent against average performers' 9-10 per cent. He added hikes for senior management were moving towards 'pay at risk'. 

The infotech industry is likely to witness an average pay hike of 11-12 per cent this year. Ghose said there would be a differential across industry segments. He said  the infotech products' segment might see 10-11 per cent hikes while services could see a 9 per cent hike. 

Increments in the financial services industry could be below 10 per cent, Ghose said. Rishi Das, CEO of recruitment firm HiRePro, said the industry would lag by up to four quarters in terms of new jobs. 

Das also pointed out the pressure from e-commerce firms would weigh on increments in the retailing and hospitality industries. 

"Automobile companies are still facing sales pressure. Salary hikes will remain below 10 per cent," said the human resources head of an automobile company with a large rural and urban presence. 

The Manpower Employment Outlook Survey for April-June said its outlook had declined in four of seven industry sectors, most notably by 11 percentage points in the services sector.

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M Saraswathy & Viveat Susan Pinto in Mumbai
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