Amid the nationwide economic slowdown, Indian companies are projected to give an average salary hike of 9.1% to their employees in 2020, the slowest wage growth rate since 2009, reported consultancy firm Aon’s Annual Salary Increase Survey.
The findings of the survey were based on responses from over 1,000 organisations spread across more than 20 industries. Through the following five charts, we take a look at the biggest takeaways from the survey.
Bleaker Appraisals in 2020?
During the worldwide economic crisis in 2008-2009, the salary hike rate had fallen sharply from 13.3% in 2008 to 6.6% in 2009.
From 2010 to 2016, the wage growth rate did not drop below the 10% mark.
In 2017 however, it fell to 9.3%. Since then, it has ranged between the 9.3 and 9.5% mark. But now, the projection for 2020 is at a bleak 9.1%, the lowest in over a decade.
Auto Industry Fares Worst in Manufacturing Sector
Even as the record slump in the auto sector continues, it is unsurprisingly the industry with the lowest projected salary hike.
- Pharmaceuticals: 9.9%
- FMCG/FMCD: 9.3%
- Chemicals: 9.3%
- Engineering/Manufacturing: 9.1%
- Cement: 8.9%
- Energy: 8.8%
- Engineering services: 8.8%
- Metals: 8.8%
- Automotive/Vehicles: 8.3%
In the manufacturing segment, pharmaceuticals is expected to give the highest salary hike followed by FMCG and chemicals.
In Services Sector, Lowest Salary Hikes in Hospitality and Transport Industries
- E-commerce/early stage: 10%
- Professional services: 10%
- Hi-tech/IT: 9.6%
- IT/ITES: 9.5%
- Retail: 8.6%
- Media (Electronic, print): 8.6%
- Financial institutions: 8.5%
- Telecom services: 8.5%
- Real estate/Infra: 8.3%
- Hospitality/Restaurants: 8.2%
- Transport/Logistics: 7.6%
Aided by Layoffs, Rise in Attrition Rate
The attrition rate increased from 15.8% in 2018 to 16.1% in 2019, aided by a rise in involuntary attrition or layoffs.
Voluntary attrition for 2019 was at 13.5%, and among companies who reported involuntary attrition, its rate was 3.6%.
Silver Linings?
Around 92% of the firms surveyed expect their business improving or stabilising in 2020 while the remaining 8% feel there will be a decline in business this year.
Despite the economic downturn, two out of five participating companies in the survey are projecting a double-digit increase in salary hikes. For example, e-commerce and professional services businesses are projected to give salary increases of an average of 10% this year.
India’s projected 9.1% salary hike in 2020 is the highest in the Asia-Pacific region, followed by China at 6.3%. However, one of the reasons for India's higher salary increase, as compared to other growing economies, is the high inflation rate.
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