Empty pockets? Salary hikes next year

While hikes in almost all categories of employee pay packets are expected to improve next year, there could be reason for you to cheer more if you are a part of the professional/ supervisor or technical group. The hike awarded to this group was 11 per cent in 2002 and in 2003 the same employee group is expected to earn the highest salary hike in 2003 at 12.3 per cent.

Overall, the highest average salary increases across all levels in 2002, by industry, were awarded to employees in the IT-enabled industry at 16.4 per cent. Though there projected increase is lower next year at 15.4 per cent, this is expected to be higher among all industry sectors.

People associated with software development and IT solution provider can also expect to get a better hike of 14.1 per cent next year compared to only 12.1 per cent salary increase this year.

Automobiles and ancillary industries are also projected to get a hike of 12.8 per cent in 2003 than actual increase of 11.4 per cent this year.

The news is not very good for engineering professionals whose hike is expected to be mere 11 per cent in comparison to 12 per cent actual hike in 2002. Similarly for chemical industry professional hike would be marginally up at 8.5 per cent than 8.1 per cent actual increase this year. But for FMCG/consumer durables and electronics industry professionals, salaries can go up to 12.8 per cent instead of 11.4 per cent this year.

Hewitt however adds a zing by saying that this year’s actuals were much higher than projected increase. Hence, next year as well employees can expect a higher salary increase compared to their projected increase.

The survey also indicated a rising prevalence of variable pay plans across India. Across the five employee groups, the contribution of variable pay to total pay is expected to go up in 2003. However, people at the senior or top level management will be most exposed to variable pay at 18.5 per cent instead of 15.4 per cent this year because they carry a lot of load behind any company’s performance. For managers too, the component of gauranteed pay is expected to come down to 85.5 per cent next year compared to 88.1 per cent in 2002. The professionals, supervisor and technical staff would receive 12.9 per cent variable pay.

However, if the top management is most exposed to variable pay, the top performers are compensated maximum. Most of the companies are maintaining high differentials according to the performance of employees. This year, if staff performing below average received only three per cent hike, the top performers were compensated with 13.5 per cent increase. The average and above average performance received a hike of 7.9 per cent and 10.2 per cent respectively. Next year is not going to be too different either, cautions Hewitt. Hence, higher the performance, better the compensation.

Not only this, due to budgetary constraints, in every organisation the number of people with outstanding rating is declining. In the year 2001, 14.4 per cent people were given outstanding rating while in 2002, their number has declined to 13.9 per cent. Number of staff getting above average and average rating has also gone down to 36.1 per cent and 43.2 per cent respectively.

Hewitt says that this is because organisations have become more discretionary in identification of high performance. Hence, higher the performance, better the compensation.

Another matter of relief is that only seven per cent respondent have projected a salary freeze next year while 16 per cent remained undecided.