Salaries in India are projected to rise by an average of 6.4 per cent in 2021, marginally higher than the average actual increase of 5.9 per cent in 2020, according to a Willis Towers Watson survey.
According to Willis Towers Watson's latest Salary Budget Planning Survey report, an average salary increase of 6.4 per cent in 2021 translates to a median increase of 7 per cent.
"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," said Rajul Mathur, Consulting Head – Talent & Rewards, Willis Towers Watson India.
Mathur further said that with compensation budgets lower than previous years, companies are likely to prioritise allocation towards protecting critical and high skilled talent. "Through 2021, we can continue to expect greater emphasis on pay for performance and pay linked to business output," Mathur said.
As per the survey, on average, 20.6 per cent of the salary increase budget is being allocated to top performers, which represent 10.3 per cent 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," the survey said.
The survey further noted that median salary increase at the executive level for 2021 is projected at 7 per cent, a slight decline from 7.1 per cent in the previous year.
For middle management, professional and support staff, a decrease from 7.5 per cent in 2020 to 7.3 per cent in 2021 is projected.
The Salary Budget Planning Report is compiled by Willis Towers Watson’s Data Services Practice. The survey was conducted online in October/November 2020 and received over 18,000 sets of responses covering over 130 countries worldwide.
A comparison of projected salary increases across key markets in Asia Pacific this year shows that Indonesia is projected at 6.5 per cent, China at 6 per cent, Philippines at 5 per cent, Singapore at 3.5 per cent and Hong Kong at 3 per cent.
Of the surveyed companies in India, 37 per cent have projected a positive business revenue outlook for the next 12 months, up from 18 per cent in Q3 2020. However, recruitment is yet to pick up.
The study showed that only 10 per cent of the organisations in India plan to add new headcount compared to 14 per cent last quarter.
A sector wise analysis shows that, high tech, pharmaceuticals and consumer products and retail, project a median salary increase around 8 per cent -- more than the general industry projection.
The financial services and manufacturing sector projects a 7 per cent increase in 2021, while the BPO sector is at 6 per cent. The energy sector is expected to see the lowest increase of 4.6 per cent.
“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, e-commerce and high-tech have experienced growth and this is reflective in their hiring plans and salary budgets for 2021," said Arvind Usretay, Director, Rewards, Willis Towers Watson India.