Mumbai: Indian employees are expected to see a salary hike of 10.8 per cent in 2015, said a survey by Towers Watson. According to the the Towers Watson 2014-15 Asia-Pacific Salary Budget Planning Report, Pakistan, Bangladesh and Vietnam are set to lead the way with over 11 per cent overall salary increases while India is placed at the fourth position.
Salaries across Asia Pacific are set to rise by an average 7 per cent in 2015 as per which included 2,900 sets of responses received from over 300 different companies across a range of industry sectors and job grades from 20 countries. However, a corresponding rise in inflation in the region implies that pay increases in 'real terms' will be eroded in the coming year.
Interestingly, China rose to the top with a real salary increase of 5.2 per cent after allowing for inflation, trailed by Pakistan (4.5 per cent), Bangladesh (4.3 per cent), Vietnam (4.1 per cent) and Sri Lanka (3.8 per cent). India dropped down by two places to sixth position with a corresponding real increase of 3.5 per cent.
The survey said that in what is a clear indication of a positive economic sentiment, all 20 surveyed countries will witness an increase in 'regular salary reviews' in 2015 with a noteworthy reduction in the number of companies that opted for a 'salary freeze' or 'postponement' in the previous year.
"We foresee an increased economic growth in Asia Pacific in 2015 in light of a declining unemployment rate and rising GDP in the region. This, in turn, will lead to inflationary pressures that affect real salary increases. Indians will only see an effective salary increase that is one-third of the overall salary increase due to such pressures," said Sambhav Rakyan, Data Services practice leader, Asia Pacific at Towers Watson.
Across the region, the survey said that employees will have pay raises equal to or higher than last year in percentage terms, with the exception of Taiwan, where the rate of increase will drop from 2.8 per cent to 1.7 per cent after inflation.
The Towers Watson survey illustrates the challenge faced by businesses in the region as they seek to balance the effect of growing inflationary pressures and managing costs, while continuing to offer salaries sufficient to attract and retain skilled staff. "Our research demonstrates that salary continues to be the number one factor for attracting and retaining talent. As a result, a majority of employers across Asia Pacific plan to allocate a larger portion of salary budget increase to high performers," added Mr. Rakyan.
Analysing the findings by employee groups in India reveals that all employees - from production workers to executive directors - are set to have higher pay raises than last year.
The pharmaceutical sector across the region, including in India, will continue to have amongst the highest salary increases. It said that Vietnam (12 per cent), India (11.5 per cent) and China (8.9 per cent) will see the highest pay increases in this sector.
The financial services sector in India has traditionally seen higher comparative pay increases, but at a modest 10 per cent, the projected salary increase for 2015 is the same as the previous year and not as high as other sectors.
"Compensation at financial institutions has become a major concern for governments and the general public as a consequence of the recent global financial crises," said Rakyan, adding that discussions have been raised to regulate bankers' compensation, especially for those whose daily job tasks include risk taking that can have a significant financial impact on the bank.
Interestingly, Indian employees at both ends of the hierarchy - top management and blue collar staff - are likely to see the highest comparative pay increase in 2015.
In 8 out of the 10 sectors surveyed, the pay raises for Executive Directors and Senior Management in India are expected to be higher than or equal to 2014 with the Professional Services sector particularly standing out at 4.5 percent.
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