India to see a 10% salary increase in 2018, the highest in APAC: Survey

India will see a 10 percent salary increase in 2018, which is the highest among all countries in the Asia Pacific region. However, it is the same as the actual increase in 2017, according to the Q3 2017 Salary Budget Planning Report released by Willis Towers Watson.

The report looks at a range of job grades across various industry sectors and is designed to provide companies with guidance for their annual salary forecasting for the year ahead.

Projected and actual salary increase

Although salaries in India are seeing a decreasing pattern in the year-on-year increases, India’s projected salary for 2018 is still the highest in the Asia Pacific region. Indonesia is projected at 8.5 percent, China at 7 percent, the Philippines at 6 percent, and Hong Kong and Singapore both at 4 percent.

Sambhav Rakyan, Data Services Practice Leader, Asia Pacific at Willis Towers Watson said, “India continues to show high salary increments compared to other countries in the Asia Pacific region.  However, given the decreasing pattern in the year-on-year salary increases, Indian employees could very well see a single-digit salary increase in 2018 for the first time since 2011.”

Rakyan added that given this trend and the rapid evolution of jobs, skill and the future of work, especially for tech-savvy talent, requires companies to rethink their talent attraction and retention strategies and realise that simply increasing compensation is not a sustainable solution.

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We are also seeing that progressive employers are beginning to leverage employee benefits as a strong lever in differentiating their employee value proposition and ensuring greater transparency in compensation and benefits related communication,” he added.

Salary allocation for top performers in 2017 increased to 39 percent up from last year’s 38 percent. On the other hand, the budget set aside for average performance budgets decreased by 1 percent to 27 percent.

Arvind Usretay, Director - Rewards - ‎Willis Towers Watson India explained that these changes are marginal, but as salary budgets get tighter, it still reflects the sentiment of employers to reward top performers. He said that they now see more companies relying on robust processes, governance and training at driving linkages between performance and pay.

The report highlights that executive salaries have plateaued and in some cases show a downward trend. However, in the mid-management level, the salary increase range is wide – from a 2-3 percent for average performers to 15 percent for top performers. The junior management salary increases will average around 10 percent but may have a wider range.

Among the industries covered in the report, the most notable projected salary increase is seen in the energy, FMCG and retail sectors. At 10.5 percent, these sectors are expected to do better than the overall projected salary of 10 percent. This is reflected in the focus on reforms in the renewable energy sector, and convergence in online and offline in the retail sector.

A significant change in projected salaries is expected in the pharmaceutical sector (from 11 percent in 2017 to 10.3 percent projected for 2018). Notably, at 9.1 percent the financial services is the only sector where the projected salary is less than the overall projection.

Rakyan said that start-ups and smaller MNCs are also likely to offer above average salary increases to attract and retain critical skill employees. The report also highlights that the top three functions companies are looking to recruit in the next 12 months are engineering, finance and marketing.

The 2017 Asia Pacific Salary Budget Planning Report is a bi-annual survey compiled by Willis Towers Watson’s Data Services Practice. The survey, timed to coincide with companies’ compensation planning for 2018, looks at a range of industry sectors and job grades from factory shop floor to executive suite, and focuses on salary movement and review practices.