Despite a tough 2020, India continues to project the highest salary increases among the BRIC nations
After a year that saw a large number of businesses announcing salary cuts, Indian organisations are expected to give an average salary hike of 7.7 per cent in 2021, according to a new study covering 1,200 participating organisations.
As per the annual Salary Increase Survey by Aon, around 88 per cent of the surveyed companies reported that they intend to increase salaries in 2021, reflecting positive business sentiment.
Despite a tough 2020 with stringent lockdowns, India continues to project the highest salary increases among the BRIC nations, the survey highlighted.
Among the specific sectors, e-commerce and venture-capital-backed companies are expected to give the highest average hike of 10.1 per cent compared to 8.3 per cent in 2020. This is followed by the IT sector (9.7 per cent), IT-enabled services (9.7 per cent), and entertainment and gaming sector (8.1 per cent). The lowest hikes are expected in hospitality and restaurants at 5.5 per cent, followed by infrastructure (5.6 per cent) and engineering services (5.8 per cent)
Nitin Sethi, Partner and CEO of Aon’s performance and rewards business in India, said, “We expect the increment dynamics for 2021 to play out over a longer period of time given the uncertainty and potential impact of forthcoming changes. The proposed definition of wages under the new labor codes could lead to additional compensation budgeting in the form of higher provisioning for benefit plans like gratuity, leave encashment, and provident fund. We expect organisations to review their compensation budgets in the second half of the year once the exact financial impact of the labor codes is known."
“It is also possible that some of the salary increments may not translate into higher cash-in-hand for employees if organizations choose to pay higher provident fund contributions on the new definition of wages,” he added.
Roopank Chaudhary, Partner in Aon’s human capital business in India, said, “The highest-paying sectors in 2021 continue to be the ones from last year – Information Technology, Information Technology Enabled Services, life sciences, e-commerce, and fast-moving consumer goods. It’s notable that the sectors that were adversely impacted by Covid-19, such as retail, hospitality, and real estate, are projecting healthy increases in the range of 5-6 per cent. Such numbers reflect their intent to stay relevant and to control attrition, which had increased for these industries last year.”