Corporate salaries unaffected by economic slow down: Study

“Contrary to expectations, there hasn’t been any dramatic move to downbeat macro-economic factors on compensation,” leader of Hewitt’s rewards consulting practice in India Sandeep Choudhuary said.

“Instead, companies are looking at innovative ways to cut other cost like travel and recreation without compromising on employee salaries or learning and development,” he added.

However, the global economic slowdown, US sub-prime crisis and rising inflation have prompted the companies to revise budget for 2009, during which the average salary is expected to dip at 13.9 per cent, the study said.

Of the organisations surveyed, 60 per cent said inflation and rising input costs had been discussed and considered in the context of salary increase budget for 2009.

Companies are looking at balancing the pressures of inflation and lower HR budgets by increasing productivity (57 per cent) and re-deployment of manpower (31 per cent).

Meanwhile, 30 per cent of them stated that they have increased performance linkages to counter fixed pay increases.

Only 20 per cent of the organisation surveyed mentioned a hiring freeze or slowdown.

While 25 per cent of the companies surveyed are considering reduction in staff budgets, with cuts largely in the areas of travel and recreation, only nine per cent of the companies mentioned a reduction in training budgets.

However, only one per cent of the companies were looking at increasing work hours to manage rising costs of business, while four per cent of them mentioned a promotion freeze, all being from the IT, ITeS and BFSI sectors.