In the latest survey of global professional services company Aon on the latest salary trends in India, 87 percent of companies have plans to increase salaries in 2021. This can bring joy to the faces of employees of Indian companies affected by the epidemic.
In this way, the percentage of companies planning to increase salary by at least a few percent in the year 2021 has increased compared to the year 2020. Last year it was 71 percent. This year the Covid-19 epidemic has had an impact on wage increases in all regions. The level of salary increase is also expected to improve in the year 2021. Of the 87 percent of companies that plan to increase salaries, around 61 percent is expected to raise five to 10 percent. In the year 2020, only 45 percent of companies had expected such a hike.
As a result, the average wage increase is projected to be 7.3 percent in 2021. Real average wage increases in 2020 were 6.1 percent. The Aon Salary Trends Survey analyzes data from 1,050 companies from more than 20 industries.
Navneet Ratan, director of Aeon (India's performance and award resolution method) said the survey estimates IT, medicine, and life sciences and ITES are considering the highest wage increases. At the same time, the hospitality sector, real estate, infrastructure, and engineering services can get the lowest wage increases. These areas have been most affected by Covid-19 and improvement in these is also sluggish compared to other areas.
The average salary increase of just 6.1 percent in 2020 is the lowest in the history of this survey. This is less than the 6.3 percent average wage increase since the 2008 global financial crisis. Ratan said that the reason for the projected increase of 7.3 percent in 2021 against the 6.1 percent average increase in 2020 is that some organizations are not going to make any increments in 2020. On the other hand, two-thirds of the companies surveyed have planned to grow at or equal to 2020 in 2021. The survey has estimated that about 26.7 percent of companies will increase their salaries in 2021 over the previous year. At the same time, 39.8 percent plan to increase salary as much as 2020, while 33.5 percent plan to increase salary in the year 2021 from 2020.
According to Ratan, in the past years decisions were taken on wage increases based on external factors, but beyond this, organizations after Covid are adopting an internal approach to the benchmark. Nitin Sethi, partner at Aon and CEO of the company's performance and award resolution methodology in India, said that the year 2020 is unusual. He said that business leaders are preferring investment over employees and customers over shareholders' returns. Sethi said, 'The impact of the Covid-19 epidemic in India has been greater and it has also had a profound impact on the economy. Despite this, organizations in India have shown a mature attitude towards their combativeness and talent. Covid-19 has different effects on different sectors and organizations and there has been a difference in the increments of different industries. Ratan said, "The difference between the companies with the highest and lowest wage increases is 7.2 percent, compared to just 2.4 percent in 2019." Before the epidemic, one of the main grounds for fixing wages has been the deployment of the employee. But by increasing the number of employees working away, organizations can rationalize pay by making changes in pay segments like HRA. On the other hand, the budget for employee benefits is lower than before Covid because some benefits such as company housing and car leasing are underutilized. According to Sethi and Ratan, the cost of other benefits came down. Yet organizations are now seeing the benefits differently. Further organizations are considering using this budget to recruit talent for specific skills and roles. Companies are willing to pay more money for skills that are useful to them.
A part of Indian companies is already hiring at the appointment level. The pace of recruitment in e-commerce and early-stage companies is fast.
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