India Inc is expected to dole out a 10 per cent salary increase in 2014, the lowest in five years, according to a survey by Aon Hewitt.
In 2013, the average salary increase was 10.2 per cent while in 2009, it was 6.6 per cent.
According to the global human resource solution provider, the average salary increase for 2014 as projected by over 500 organisations in India stood at 10 per cent, with a range of 8.8 per cent to 12 per cent across industries.
The years 2012-14 are witnessing a sort of “plateauing” in salary increases as compared to the high double-digit increases in the last decade, according to the report.
“This period reflects the easing off of the unsustainable, turbo-charged, pre-crisis economic growth. Even though growth appears to be strengthening in both advanced and developing economies, it is expected to be muted and slower paced than in the pre-2008 era,” Aon Hewitt India Rewards Consulting Practice Leader Anandorup Ghose said.
Sectors largely reliant on the domestic economy such as pharmaceuticals, chemicals, engineering services and consumer goods, project the highest salary increases, typically above 10 per cent for 2013-14.
Retail, financial services and hospitality forecast a lower range of salary increases, with these businesses affected by the slowdown in the economy and consumer spending.
Globally, Venezuela projected the highest salary increase (24.9 per cent), followed by Argentina (24.3 per cent) and Vietnam (11.1 per cent).
Continuing the trend of the previous few years, the developed economies of the US, the UK and Japan show salary increases in the range of 2.4 per cent to 3 per cent.
India leads salary increase projections across key APAC countries, followed by China.
Reasons for lower budgets include concerns over fluctuating economic conditions, cited by 57.6 per cent of the respondents. A third (33.5 per cent) said their organisation is undergoing cost reductions.
Some organisations are managing wage cost escalation by freezing hiring, transferring salary increases from fixed pay to variable pay and recruiting replacements at lower salaries.