New Delhi: India Inc will offer an average pay hike of 9.1% to their employees in 2020, lowest in a decade, as companies tighten their purse strings amid a tough economic environment, the Aon annual salary outlook survey showed on Tuesday.
The hike is less than 9.3% paid in the last appraisal season and lowest in 20 years, except 2009 when Indian companies paid an average 6.6% hike in the wake of a global economic meltdown. At 9.1%, the average salary growth would show a successive fall in pay hike since 2015.
The study, one of the most comprehensive of its kind in India, analysed data from over 1,000 firms from 20 sectors. As per the survey, while startups/e-commerce, services and pharma firms will be the top pay masters in 2020, sectors like logistics, infra, auto and hospitality are expected to be paying the lowest average pay hike this appraisal season.
While e-commerce and startup firms are set to offer 10% average hike, same as professional services, pharma and IT companies are likely to hike salaries by 9.9% and 9.6%, respectively. The logistics and transport sector with a projected pay hike of 7.6% are at the lowest position of the pay ladder this year, closely followed by hospitality (8.2%) and infrastructure (8.3%).
The automotive industry will see the biggest drop — from 10.1% in 2018 to 8.3% for 2020, the survey said.
“Companies in India gave an average pay increase of 9.3% during 2019, reflecting a slowdown in the economy compared to 2018. The projection for 2020 is down by 20 basis points to 9.1%. However, despite the dip in the projections, two out of five participating companies in the survey are projecting a double-digit increase, expecting a positive economic outlook,” the survey underlined.
Yet, India Inc will offer a better pay hike than its Asian peers, said Aon, a leading human resource and consulting firm. Chinese companies are expected to offer 6.3% hike, the Philippines 5.8%, Malaysia 5.3%, Singapore 3.8%, Australia 3.1% and Japan 2.4%.
“Despite economic challenges in 2019, organizations in India are taking a positive view. Pay increases in India continue to be the highest in the region. A big reason for India’s higher salary increase, as compared to other growing economies, is the high inflation rate and the war for key talent and niche skills,” said Tzeitel Fernandes, partner, rewards solutions at Aon.