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Salaries in India likely to rise 10%; inflation plays spoilsport

November 15, 2016 22:59 IST

Once average inflation for India of 5.7 per cent is taken into account, the projected increase in real terms for 2017 will be 4.3 per cent

Salaries are expected to rise by 10 per cent in 2017, while star performers will attract much more as companies are discernibly prioritising such employees, says a report.

According to the 2016 Salary Budget Planning (Q3) Report released by global advisory, broking and solutions company Willis Towers Watson, salaries in India are projected to rise 10 per cent in 2017, same as the actual increase in 2016.

Once average inflation for India of 5.7 per cent is taken into account, the projected increase in real terms for 2017 will be 4.3 per cent, down by a fraction from 4.4 per cent in 2016.

The report noted that with tighter salary increase budgets, organisations are prioritising their top performers.

Similar to trends in the Asia Pacific region, the report indicates that in India, 38 per cent of the budget for salary increase goes to top performers. Another 34 per cent is shared by above-average performers while the remaining 28 per cent goes to average performers.

"The data clearly shows a greater emphasis on rewarding high performers rather than across-the-board increases for all workers. Without such differentiation, companies will face pressure in attracting and retaining talent, especially for in-demand areas," Sambhav Rakyan, Data Services Practice leader, Asia Pacific, at Willis Towers Watson said.

The report further noted that salaries were projected to rise 10.8 per cent in 2016, but in reality rose just 10 per cent - the second time below projected increases since 2015.

"If that pattern continues in 2017, Indian employees could see a single digit salary increase for the first time since 2011," the report said.

When compared to developed and key emerging markets in the region, India's 2017 projected salary rise is the highest.

Indonesia at 9 per cent, Sri Lanka at 8.9 per cent, China at 7 per cent and Philippines at 6.4 per cent are the other countries that make up the top five in this group.

Salaries in developed markets such as the US and UK are projected to increase around 3 per cent.

The pharmaceutical sector continues to project higher salary increases as compared to most other sectors at 11 per cent, while the financial sector will likely remain well below average at 8.5 per cent.

The projected salary increase in the high tech sector for 2017 is likely to be the same as the previous year at 10 per cent.

The 2016 Asia Pacific Salary Budget Planning Report is a bi-annual survey compiled by Willis Towers Watson's Data Services Practice. The survey was conducted in July 2016.

Around 4,000 responses were received from companies across 22 markets in Asia Pacific.

Illustration: Uttam Ghosh/Rediff.com

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