India Inc will see single-digit salary increases for the first time in six years and the salary increase projections may fall even further in the coming months, says a report by HR consultants Hewitt Associates.
The report noted that while salary increase projections for 2009 in India dipped to 8.2 per cent from an actual increase of 13.3 per cent in 2008, they continued to be highest in the Asia-Pacific and among the highest, globally.
And, amidst global layoffs, less than 16 per cent of companies in India are considering retrenchment. More than 60 per cent of companies in India are still hiring, and nine out of every 10 companies are still giving promotions.
Of the 480 companies surveyed, 16 per cent have reported salary freezes in 2009. According to the Hewitt report, almost all employee levels have been impacted equally by the reduction in salary increase budgets but there is some marginal respite for general staff and the manual workforce.
A sectoral comparison shows that despite the economic downturn, sectors that cater directly to consumers, such as FMCG, consumer durables and telecom, have a positive outlook and are projecting among the highest salary increases.
The pharma industry has the highest salary increases. Given the economic downturn, over 90 per cent of organisations are projecting a reduction in bonus payouts as a result of business performance falling below expectations, the report said.
On how employees can cope with changing market conditions, Sandeep Chaudhary, leader of Hewitt's performance and rewards consulting practice in India, said, "Trainees and new joiners can expect longer probation periods, with lower salaries. There may also be cutbacks in intern stipends or even no stipends, though companies will continue to provide opportunities for such assignments."
