SALARY SLUMP

Urmila Rao
Outlook Money (Edition: September 10, 2008)

Next year, there will be less reason to cheer in terms of salary hikes. The average salary increase projections for 2009 are lower by a percentage point, at 13.9 per cent, according to the Hewitt Associates Salary Survey, published by the human resources consulting and outsourcing services firm.

Though 2008 is seeing a strong average salary increase of 14.8 per cent, the global economic slowdown, US sub-prime crisis and rising inflation have caused Indian companies to revisit salary budgets for 2009.

Your only option to beat the odds would be a good performance. In the current economic slowdown scenario, performance-linked salaries are going up for middle and senior executives, reveals the survey.

Hewitt surveyed 150 companies, analysing information across nine primary industries, including BFSI (banking, finance, security and insurance), retail and IT/ITES sectors, among others. It measured actual and projected salary increases, and compensation practices for six specific job categories from top executive to manual workforce.

As many as 42 per cent of the companies said that they would have lower salary increases, bringing in a greater correlation between performance and pay, while 28 per cent stated that they would hire fewer staff. Meanwhile, 30 per cent have increased performance linkages to counter fixed pay hikes. None of the organisations surveyed are expecting a salary freeze for 2009.

Sandeep Chaudhary, leader of Hewitt’s Rewards Consulting Practice in India, said: “There hasn’t been any dramatic move in salary cuts. Instead, companies are looking at innovative ways to cut other costs like travel and recreation without compromising on employee salaries or learning and development. This is a sign of a growing and mature economy.”

The average salary increases across levels continues to be led by middle and junior management.