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Salary hike? High inflation will eat up your savings

Source: PTI
Last updated on: November 11, 2014 15:50 IST
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Employees in India will see their salaries increase by an average of 10.9 per cent in 2015, but high inflation will end up eroding much of their wages, says a report.

"Although wage increases in India are among the highest in Asia, once inflation is taken into account salaries will rise only 3.4 per cent on average next year," ECA International regional director – Asia Lee Quane said.

Indian workers are expected to feel slightly better off next year amid decreasing inflationary pressures.

"Nevertheless, with inflation expected to be slightly lower next year, wages will increase more in real terms in 2015 than they did this year when they rose just 2.7 per cent above inflation," Quane said.

Average salary across Asia Pacific is set to rise 7.2 per cent in 2015, while Indian employers are expected to dole out a hike of 10.9 per cent.

According to the survey by ECA International, the biggest pay rises in the region have been forecast in Pakistan where companies are anticipating 12 per cent rise on an average, followed by Vietnam in the second position and India in the third position.

But the configuration changes vastly once inflation is taken into consideration. Vietnam would feel the best off in Asia, followed by China in the second place and Pakistan in the third place respectively.

In the Asian region, once inflation is taken into account, India's place falls to seventh on the list, lower than Thailand (4th), Bangladesh (5th) and Sri Lanka (6th).

Employees in Japan would see the region's lowest wage hikes next year as much of the 2.3 per cent increase is likely to be eroded by inflation, the report said.

On the other hand, companies in mainland China are planning to award an average 8 per cent salary increases again next year. Even after inflation, staff there will be among the best off within the region and globally: they can expect to see rise of 5.5 per cent.

On average, salaries in Asia are expected to increase by 7.2 per cent in 2015 and after factoring in inflation it will average 2.7 per cent, higher than the other regions surveyed.

According to company predictions from around the globe, wages would rise 5.8 per cent on an average in 2015, slightly up on this year's 5.6 per cent average.

This year's survey was based on information collected from 340 multinational companies across 66 countries and regions. More than 100 companies provided data on their India-based staff. 

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