HR experts estimate that up to 70 per cent companies in the manufacturing and services space including sectors like auto components, edutech and construction equipment are looking to restore the salary cuts over the next couple of months.
After nearly seven months of reduced salary due to the pandemic stress, Priyanka Singh (name changed), a senior executive at an online radio platform, will finally receive her full remuneration for this month, just in time for the Diwali festivities.
“There is some solace that salaries are back to normal. We are all hoping that things remain stable now,” says Singh.
Over the last three weeks several technology bellwether firms - TCS, Infosys, Wipro, HCL and Mindtree - have announced plans to give out increments and bonuses.
Now, several manufacturing and services companies are looking to roll back salary cuts that came into effect in April and May, post the pandemic-induced lockdown and travel restrictions.
Some of these companies had cut salaries of senior executives by as much as 50 per cent, while at lower levels the cut was anywhere in the range of 5-20 per cent.
Businesses, faced with uncertain economic situations, responded in varying manner - pay cuts to salary freeze, bonus deferrals to retrenchments.
HR experts estimate that up to 70 per cent companies in the manufacturing and services space including sectors like auto components, edutech and construction equipment are looking to restore the salary cuts over the next couple of months. More so around Diwali.
In fact, increments held back for past performances are now being given out.
Companies are also increasing the variable component in the key result areas.
“While this was common for sales jobs, we are now seeing such structures being created for non-sales staff as well,” says Amit Vadera, assistant vice president, TeamLease Services.
Till now sectors such as pharma, consumer food, technology, Global In-house Captives (GICs), that have largely fared better in the last six months, are the early movers in giving out increments.
Experts point out that the latest salary moves are being decided according to the impact the pandemic has had on a business.
“This is based on the business recovery they are seeing, and a better cash flow situation,” says Navneet Rattan, director, performance & rewards, Aon India.
Blue-collar jobs, such as those related to supply and delivery chains, logistics and support operations, packaging, and warehouse management are also witnessing traction ahead of the festive season.
However, most salary reinstatements or hikes, ahead of the festive season, are expected to be muted, say experts.
Any salary increases or even reinstatement is seen as a fixed cost.
So, companies are likely to first assess whether the business would be able to bear the additional costs, points out Mansee Singhal, senior principal with Mercer India. Reaching the pre-Covid level of salary hike is still some time away.
“There is need for a lot of business revival to support the pre-Covid numbers,” says Singhal.
Her assessment is that return to pre-Covid level would be visible some time in 2022.
Over the last two to three years, average annual salary increments in corporate India has hovered around the 10 per cent mark.
Atul Vohra, managing partner, Transearch India, an executive search firm, points out that there is an uptrend in compensation packages in certain sectors such as digital and technology where the demand for talent far outstrips supply.
However, most HR experts agree that companies are taking a selective view while considering salary reinstatements or even while giving out hikes.
Some companies are giving priority to junior employees who might be stressed for cash, says Sudhakar Balakrishnan, group CEO, FirstMeridian, an HR investment platform.
As the salary corpus across companies shrinks, experts expect increments to become more specific and corrective in nature to ring-fence critical talent.
Alongside, there would be more aggressive differentiation among performers, they add.
In sync with the times, many companies are in the process of redesigning their variable pay and sales incentive programmes to make them more contextual to the business environment.