No salary hike for 14% firms next year

Indian companies are expected to offer an increment of 7.3 per cent in 2021, more than 6.1 per cent that was given to employees in 2020. But, there is more to it than what meets the eye.

The average is more because lesser number of companies intend to continue with their salary freeze this year.

Last year, 29 per cent companies had done a salary freeze. Since the current health crisis is not over, for 2021, 14 per cent firms have projected to not give any salary hikes.

Beyond that the percentage of increment that companies intend to give to their workforce has not changed.

In 2020, 28 per cent organisations gave 8-10 per cent hikes. In 2021, 32 per cent have said they will give hikes in that range. Similarly, 16 per cent organisations gave more than 10 per cent increments in 2020. For 2021, 15 per cent organisations have said they will give increments in that bracket.

The findings are a part of Salary Trends Survey in India by professional services firm Aon that studied data across 1050 companies from 20 industries.  

Some organisations had already given hikes by the time COVID-19 impacted India in 2020. These firms will be giving lower hikes in 2021, especially. Hence, 33 per cent organisations are saying the increments they will give in 2021 will be lower than what they gave in 2020.  

So, while certain sectors are reporting recovery and green shoots, employees should not expect better increments this year as well.  

"In FY20, bulk of the companies gave hikes in the range of 7-10 per cent compared to 5-10 per cent in FY21, so there is a downward slide in that sense," says Navneet Rattan, Director at Aon in India's Performance and Rewards Solutions practice.  

In fact, not giving salary hikes is also unusual for Indian firms.  

"It is not a trend in India to not give employees salary hikes. Salary freezes had happened during the global financial crisis and then this year in 2020. Usually, 1-2 per cent organisations would look at something like that which is more to do with business reasons than market outlook," says Rattan.  

The industries looking to provide the highest salary increases are high technology (Hi-Tech), information technology (IT), IT-enabled Services (ITeS), life sciences, e-commerce, chemicals and professional services.  

Meanwhile, companies in the hospitality, retail and real estate/infrastructure industries, which had given low increases in 2020 are projecting a higher increase for 2021, but still trail most other sectors.

Rattan says that the difference in speed of recovery within sectors will also widen the range of salary hikes. "The impact of COVID-19 has been varied on different sectors and organisations. We see high differentials in salary increases - both intra and inter-industry. The difference between industries with highest increase to lowest increase hits 7.2 per cent points compared to mere 2.4 per cent points in 2019," he says. 

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