Salaries of Indian employees are not likely to be hiked more than 9.1 per cent in the year 2020. This increase in salary is pegged to be the lowest in the decade, according to a study by Aon. However, the decline is not that significant when compared to the salary hike of 2019, which stood at 9.3 per cent. The hikes given by companies has been declining post the year 2011, when the average salary increase stood at 12.6 per cent. According to Tzeitel Fernandes, Partner, Rewards Solutions at Aon, the estimated decrease is cautionary as the GDP projection for 2020 has been lowered and consumer sentiments have been weak. Moreover, she stressed that there is a "general air of caution" considering the economic parameters currently.
Despite the fact that all the industries in India, on an average, will not witness an increase in salary beyond 9.1 per cent, 39 per cent organisations are still projecting to increase the employee salaries by double-digits, while 42 per cent companies are looking at 8 per cent to 10 per cent hike. Fernandes also mentioned that the companies are still optimistic that salaries will go on a higher scale as the inflation rate is elevated and there is a war for key talents.
The company also mentioned that e-commerce and professional firms are likely to give the highest average pay raise by up to 10 per cent in 2020. This is followed by companies related to Pharmaceutical/Medical Devices, which are expected to improve salaries by 9.9 per cent. Furthermore, salaries of employees working with Hi-Tech/Information Technology firms, FMCG companies, ITeS, Engineering and Manufacturing, and Chemicals industry will see a raise between 9 per cent to 10 per cent.
However, with the unprecedented slowdown, the automotive sector is likely to witness the biggest drop in the last two years as the salaries for those working in this sector will only rise by 8.3 per cent as against 10.1 per cent hike in 2018. Meanwhile, the differences in pay have been reducing among sectors within India and majority businesses are expected to witness mature business ecosystems, said Navneet Rattan, Director, Organization, Performance and Rewards, Aon India.