Indian employees are likely to fetch an average salary hike of just 10.3 percent this year, as industries have been impacted by the country’s poor economic scenario, says HR consultancy firm Aon Hewitt. This will be the lowest in a decade barring the sub-prime crisis year of 2008.
Sandeep Chaudhury, practice leader, Aon Hewitt told CNBC-TV18 that if one looks at the real performance of corporate India over the last 12 months, even 10.3 percent salary hike is an optimistic estimation.
Below is the verbatim transcript of Sandeep Chaudhury's interview on CNBC-TV18.
Q: According to you the average salary hike for 2013 will be 10.3 percent and growth is likely to come in for the economy and for the gross domestic product (GDP) at about 5 percent, isn't 10.3 percent then a tad optimistic?
A: Yes absolutely. If you just look at the real performance that the corporate India has been able to generate over the last 12 months, even 10.3 percent could be a liberal way to look at salaries for 2013. I think organisations are taking a bit of a long-term view of how they want to invest in talent. We have seen a bit of a discerning point of view even when the wage distribution is coming very high, when it comes down to how different sectors are looking at it.
Q: Speaking of sectoral performance like auto where the performance this year has been particularly bad across the board for both passenger cars as well as the two wheeler business and the commercial vehicle (CV) business, the salary hike is above the average at 11. 2 percent. Haven’t we seen a fair amount of volatility in the numbers even as far as banking and financial services are concerned, technology is concerned?
A: If we just look at the auto industry, salary increase is currently sitting at a projection of 11 percent for the year 2013. It is down by 2 percent from the data that we collected in the middle of 2012. They have essentially revised looking at a bit of a weak indication in terms of how the units per sales would improve in the year 2013. For the manufacturing and the industrial sector salary is still not a very high pressure point because they sit at a single percent as a percent of the overall revenues in the operating expenses.
If you look at the same logic played out with banking and financial services, that section in particular and it is just a too wide a sector. Insurance looks at their salary increases a little better than the larger part of the investment banking and the asset management community and the retail and the corporate just doing marginally better than that. So, even 8 percent of financial services could look at a variance anywhere between 3 to and 8 depending on which sector or financial services we are looking at.