'Despite inflation, cost pressure, salaries witness 15% increase'

NEW DELHI: Rising inflation and higher input costs may be putting pressure on India Inc but this has not taken a toll on employee salaries. At least not yet. In fact, salaries went up by almost 14.8% this year. Indeed, this may be lower than last year's average of 15.1%, but the slowing down of the economy has not really affected salaries this year.This was revealed by a study conducted across 150 companies by Hewitt Associates.
However, the scene may change next year, as 63% of organisations surveyed said that inflation and rising input costs have been discussed and considered in the context of their salary increase budgets for 2009. Many of them are looking at ways to balance the pressures of inflation and lower HR budgets.
But there is no need to worry yet feels Sandeep Chaudhary, leader of Hewitt's Rewards Consulting Practice in India. "While salary increases have been between 14%-15% since 2004, a slightly lowered projection is not a sign of worry. This is a good time for organisations to consolidate their HR strategies towards a high performance orientation and also look at removing redundancies."
Among the various sectors, it's the infrastructure (24.1%) which has registered the highest salary increase this year. Although, its lower than last year's 28.4%. Banking, financial services and insurance sector at 16.5% saw the second highest increase followed by manufacturing at 15.1%. Salaries in the IT/ITeS sector have dropped compared to 2007 at 12.6% and the trend is expected to continue in 2009.
In fact, projections for next year are not so hunky dowry. The average hike across sectors is expected to be 13.9%, lower than this year. However, salaries in the telecom sector is expected to continue moving north in 2009.
Most sectors will see a dip of 1-2 percentage points next year. At 19%, infrastructure sector is expected to register the maximum dip.
Much like last year, the average salary increases will be the highest at the middle and junior management levels at around 15%. Interestingly, general staff and manual workforce are witnessing higher salary increases compared to last year. Chaudhury says, "The job market has slowed down considerably across sectors, and the irrational salary offers being given to hire talent in the past will now be restricted to a much smaller population."