Indian employees could see an 11 per cent rise - not taking inflation into account - in salaries next year, according to a survey by professional services company Towers Watson. Salaries across Asia-Pacific were set to increase an average seven per cent in 2014, the study added.
Taking inflation into account, employees in China and Vietnam (4.9 per cent) would see the highest increase, while those in Japan (0.5 per cent) and India (two per cent) would record the lowest, said Towers Watson. If inflation isn't considered, salaries in Hong Kong and Singapore will rise 4.5 per cent, Australia four per cent, Philippines 6.9 per cent and Indonesia nine per cent.
"Overall, the Asia-Pacific data for 2013 and 2014 looks similar. So, companies should be budgeting for salary increases much the same as last year. However, at the end of the day, it depends on the affordability for the company. If the company is growing at a fast rate and revenue exceeds the cost by a huge margin, it is easier to be aggressive on salary budgets than low-growth companies," said Sambhav Rakyan, global data services practice leader (Asia-Pacific), Towers Watson.
The study said about 80 per cent of the companies surveyed in India said in 2014, a larger portion of their allocation towards salary increase would go to high performers, as respondents from the Indian retail industry said they were planning along these lines.
Reflecting the continued challenges faced by the Indian automotive industry the survey found 10 per cent of the companies anticipated a pay freeze in 2014, compared with the overall average of one per cent.
Also, 11 per cent plan to allocate their entire budget towards salary increases to high performers, perhaps to retain top talent.
In the fast-moving consumer goods sector, 56 per cent said a large portion of their budget towards salary increases would go to high performers, while 44 per cent said all employees would record the same increase in salary.
Subeer Bakshi, director (talent and rewards), Towers Watson India, said the research clearly indicated both employers and employees in India ranked base pay among the top two retention drivers.
Traditionally, Indian companies have offered high salary increases compared to the rest of the region. But the situation is different today.
"They continue to offer double-digit salary increases, as they deal with the challenge of attracting and retaining critical talent, but high levels of inflation end up eroding much of this rise. Part of the solution lies in the articulation and execution of a strategically designed employee value proposition --- the give and get between employer and employee," Bakshi said.
The report, APAC (Asia-Pacific) Salary Budget Planning Report, was compiled by Towers Watson's data services practice. The survey was conducted in July and August 2013 and about 2,700 sets of responses were received from companies across 20 countries in the Asia-Pacific region.