Indian Companies Might Give an Average Increment of 7.3% this Year: Survey
The survey conducted by Deloitte Touche Tohmatsu India LLP has revealed that the first phase of the 2021 Workforce and Increment Trends of this year would be higher than 4.4 percent seen in 2020 but lower than 8.6 per cent given by companies in 2019
According to a survey, the Indian companies are expected to dole out an average increment of about 7.3 percent to employees this year amid faster-than-expected economic recovery and revival in business and consumer confidence. As many as 92 percent companies that participated in the survey intend to give an increment in 2021 as much as only 60 percent of last year.
The survey, launched in December 2020 as a B2B India-specific survey, covered around 400 organisations spread across seven sectors and 25 sub-sectors.
The survey states, “Average increment for companies in India is expected to go up to 7.3 per cent from 4.4 per cent in 2020. This 7.3 per cent projected increment is lower than the 8.6 per cent average increment in 2019. The increase in increment budgets is in line with the faster-than-expected economic recovery, revival in business and consumer confidence, and early signs of improving corporate profitability.”
According to the reports, about 20 percent of companies plan to give a double-digit increment this year compared to only 12 percent in 2020. Out of the 60 percent companies that gave an increment in 2020, a third of them did that through off-cycle increments.
Among the companies that did not give an increment in 2020, “only about 30 per cent plan to compensate employees for the previous year through higher increments and/or bonuses.”
It adds, “Life sciences is the only sector that will be able to match its 2019 increment levels. For others, average increment in 2021 is expected to be lower than 2019. Only digital and e-commerce companies are expected to offer double-digit average increments in 2021. Increments are likely to be the lowest in hospitality, real estate, infrastructure, and renewable energy companies.”
Average India 2021 increment of 7.3 percent is still considerably lower than 8.6 percent in 2019. While business activity is rebounding quickly, organisations are managing compensation budgets responsibly considering their affordability and sustainability of fixed cost increases.
According to him, post March 2020, most companies decided either not to offer increments or defer them until they get more clarity and around 25 per cent companies even extended a pay cut to their senior management.
It further adds, “At an all-India level, voluntary attrition reduced from 14.4 per cent in 2019 to 12.1 per cent in 2020, involuntary attrition (layoffs, restructuring, etc.) increased from 3.1 per cent in 2019 to about 4 per cent in 2020. Involuntary attrition increased the most in the IT and services sectors, whereas voluntary attrition reduced across sectors.”
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