India may see 8.2% pay raises, best in Asia-Pacific

The world might be witnessing a crisis, with jobs being lost, salaries being cut, and hirings coming to a standstill. But in India the scene is slightly different.

Notwithstanding the scare of freezes and cuts, there will be salary raises this year too, says a survey by a leading human resources company.

The raises, which will average 8.2% across industries, will be among the highest in the Asia-Pacific region and also globally.

The salary increase survey by Hewitt Associates, which was conducted among 480 companies over December 2008 and January 2009, says that though the projection for India this year has dipped from the 13.3% level seen in 2008, it is by far the best, when compared to other countries.

Only China (with an 8% salary increase projection) comes close. The projections for Japan (2.3%), the US (3.2%), Australia (3.5%), the Philippines (6.4%), and Singapore (3.8%) are way below that for India.

But Sandeep Chaudhary, Hewitt's consulting practice official, added a note of caution: "The employment situation is bad. Expectation of a salary hike of 8.2% is an optimistic view. But if the situation does not improve, then this projection can further fall to 6.2% within two months."

The survey reveals that economies that had very close economic ties with the US are the ones that have been affected the most by the global recession and thus reflect very poor salary increase projections.

The stable pharmaceutical sector tops the survey with average projected salary increases of 13%. It is followed by telecom (11.3%), fast-moving consumer goods (11%), and chemicals (10.9%).

But, according to an official from a pharmaceutical company based in Mumbai, a salary raise of 13% seems too optimistic a figure. "I think 7-9% hikes for the pharma industry are much more relevant," he said. "Though pharma has not been affected (by the recession), the quarterly results of several companies this time have not been very encouraging."

According to VP Kamath, CEO of Apollo Hospitals, Mumbai, as sectors like healthcare have remained largely insulated from the downturn, they will continue to see salary increases. "I think a 10% hike is what we would get to see this time," he said.

But Natwar Nagar, director of executive search and compensation consulting firm HVS Executive Search, said the maximum raises could be less than 10%. "This is much lower than the average 20-25% hikes we would see in previous years," he said.

Moreover, the variable pay portion, which constitutes about 50% of the salary in sectors like information technology and banking, is under pressure as this component is as much dependent on the company's performance as on that of the employee. And this time corporate goals are being missed by a mile. "So variable payouts won't be complete," said New Delhi-based HR consultant Yogesh Saigal.

According to the HR official of a mid-sized IT company based in Bangalore, variable payouts would be only a third or, at best, two-thirds of the total variable component this time.