Moneycontrol
Last Updated : Oct 06, 2018 03:29 PM IST | Source: Moneycontrol.com

India Inc salary hike projected at 10%: Is the math wrong?

Large-scale surveys by HR firms seem to overlook the ground realities

M Saraswathy @maamitalks

Just like past five years, surveys by most recruitment firms have projected a 10 percent increase in salaries next year. Unfortunately, the ground realities are different.

Most human resource firms are very guarded about the criteria that is followed in these annual surveys. Also, most surveys have employees as a part of the research. As an employee, I would certainly demand a 50 percent hike. But that does not mean that the organisation will be ready to offer a similar quantum of hike. These surveys make presumptions based on such views.

Further, all surveys look at a sample size of 1,000 or below, thereby missing the mark as it is an inadequate sample size. Industry officials say that the large human resource firms usually speak to a handful of companies in the cities every year, which is not a true reflection of the HR practices in companies.

For instance, e-commerce companies offer a 30-35 percent hike to retain their employees. Traditional manufacturing firms have been restricting salary increments at 3-5 percent, though they change the compensation structures.

In this scenario, how has the salary hike forecast stays at 10 percent when inflation has been fluctuating every single quarter, is a pertinent question.

Companies across India Inc have been on a ‘cautious but optimistic’ mode for three years. But the pattern of rate hikes have been varied. Average performers had been handed a 3-4 percent pay rise last year, which inched up to around 5 percent this year. But the surveys have mostly failed to capture this change and maintained the forecast at 10 percent.

On the other hand, sectors like transportation and telecom have given zero hikes this year to most employees. This was a gradual decline from around 6 percent in 2016 and 4 percent in 2017. HR surveys seem to have missed these factors in their surveys.

Meanwhile, the monetary policy committee too revises its forecasts on gross domestic product and inflation during its bi-monthly policy decisions. But compensation reports by large HR firms haven’t shifted from the 10 percent prediction.

At a time when 5 percent hike is the new normal for regular employees across sectors, human resource firms should also take into account these changes across companies. The surveys being done in silos can no longer present an accurate picture of the ground realities.
First Published on Oct 6, 2018 10:28 am
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