Companies in India likely to offer 7.7% salary hike in 2021: Survey

The proposed definition of wages under the new Labor Codes could lead to additional compensation budgeting

Nearly 88% of the 1,200 firms surveyed across 20 industries in India by Anglo-Irish professional services firm Aon are likely to offer salary hikes to their employees this year as the Covid-19 woes have begun to ebb.

The salary hike could be 7.7% in 2021 as against 6.1% last year, but an increase in bonuses could be muted, the survey data showed

Sectors such as e-commerce and venture capital-backed firms may offer the highest salary hike of 10% while hospitality/restaurants may offer the lowest at 5.5% in 2021.

India’s salary increases could be the highest among the BRICS countries.

Nitin Sethi, CEO of Aon’s performance and rewards business in India, said they expect organisations to review their compensation budgets in the second half of the year once the exact financial impact of the labour codes is known.

“It is also possible that some of the salary increments may not translate into higher cash-in-hand for employees if organisations choose to pay higher provident fund contributions on the new definition of wages,” Sethi said.

Despite a tough 2020 with stringent lockdowns, India continues to project the highest salary increases among the BRIC nations, according to Aon.

The highest-paying sectors in 2021 continue to be information technology, information technology-enabled services, life sciences, e-commerce, and fast-moving consumer goods.

“It is notable that the sectors that were adversely impacted by Covid-19, such as retail, hospitality and real estate, are projecting healthy increases in the range of 5-6%,” said Roopank Chaudhary, partner in Aon’s human capital business in India. Separately, a Care Ratings survey found online sales have gone up from -3% in February last year to 17% in September.

The boom in e-commerce sales was due to the spread of the virus that led to an acceleration in online sales of consumer products as consumer behaviour changed during the lockdown with people avoiding physical store visits due to fears of virus contraction.