The annual India Salary Increase Survey, conducted by Hewitt Associates reveals an increase in salary ranging between 9.5 per cent to 12.6 per cent. The figures reflect a reversal in a six-year trend of declining pay increases. Between November 2003 and January 2004, Hewitt surveyed 521 foreign-owned, locally-owned, and joint-venture organisations across 23 industries representing approximately 6,50,000 employees.The increases ranged from 9.5 per cent-12.6 per cent in 2003, as compared to increases between 7.7 per cent-10.9 per cent in 2002. Chennai reported the highest average salary increases of 13.5 per cent, followed by Bangalore and Kolkata, with increases of 12.5 per cent and 11.5 per cent, respectively.For 2004, the Hewitt study projects that the average salary increases will range from 9.7 per cent to 13.4 per cent across all employee groups. The study also found a drastic reduction in respondents projecting the need for a salary freeze at 0.2 per cent in 2004, compared to 4 per cent in the previous study.‘‘A robust GDP growth and higher business confidence are the two critical factors that have led to the higher average salary increases in 2003,’’ said Nishchae Suri, Hewitt’s India business consulting leader.Employees in the professional/supervisor/technical group enjoy the highest average salary increases for fourth year in a row at 12.6 per cent. In 2004, senior/top management can expect an average pay rise of 11.8 per cent, managers 12.7 per cent, clerical/support staff 12 per cent, and manual 9.7 per cent. Among the various industries, the IT-enabled industry-call centres, medical transcription firms, and back-office operations-handed out the highest average salary increases in 2003, of 13.8 per cent. Other sectors that enjoyed higher than average increases in 2003 were software development (13.7 per cent), IT solutions provider (12.8 per cent), freight/shipping/logistics (12.7 per cent), healthcare/medical products (11.9 per cent), and entertainment/communications/publication (11.5 per cent). Industries with the lowest increases in 2003 were banks, financial services, insurance, and engineering/power/construction (EPC) with increases of 7.6 per cent, 7.8 per cent, 8.2 per cent, and 8.3 per cent, respectively.The Hewitt study also showed that the linkage between pay and performance is getting stronger. The results revealed that an outstanding performer typically earns more than twice the salary increase earned by an average performer. Nearly all (85 per cent) of respondents reported having a variable pay plan in 2003.‘‘In fact, variable pay for other employee groups is expected to rise in 2004. This leads us to believe that companies are now gradually moving towards a philosophy of higher pay for enhanced performance,’’ Suri said. Almost half (47 per cent) of the organisations reported using long-term incentive awards, which included stock options, performance shares/units, restricted stock and other equity-linked vehicles such as phantom stocks and employee stock purchase plans. While hiring has picked up, the job groups that ranked the most challenging to fill in 2003 were IT, operations, and sales.
