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| Firms may cut planned salary hikes in '09: Survey |
| BS Reporter / New Delhi Dec 19, 2008, 00:09 IST |
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A large number of firms in India are likely to cut back on the salary increases they had planned in 2009. Moreover, they are also likely to curtail overall hiring, according to a new Mercer study.
 According to the survey, over 80 per cent of the respondents expect their company’s business performance to decline in 2009 and 7 per cent expect increased merger and acquisition activity. The survey also notes that the companies plan to look closely at holding down the level of compensation increases, with 83 per cent saying that 2009 salary increases will now likely be lower than originally planned.
Only a minority of the Indian companies surveyed are considering more drastic step of freezing 2009 salaries at 2008 figures, with 19 per cent of the survey respondents saying that such a step is likely and 24 per cent saying a salary freeze is somewhat likely.
In India, half of the respondents in the Mercer survey said their company is likely to reduce the previously budgeted 2009 bonus payouts for performance in 2008.
Padma Ravichandar, Country Leader, Mercer Consulting (India), said: “Employee costs have risen in India at double-digit rates, since 2003 and cost structures have been coming under severe strain. In the near term, the adverse impact of business sentiment seems all pervasive.”
The survey indicates that most of the companies in India plan to avoid significant workforce reductions, but they don’t plan significant hiring either. Nearly two thirds (63 per cent) of the Indian companies surveyed say it is unlikely that they will reduce their workforce by significant numbers. But only 1 in 4 Indian companies expect to continue their hiring activities at or above the replacement levels.
On other aspects of workforce planning, two in five Indian companies plan to increase the number of temporary or part-time employees as a percentage of their total workforce. Moreover, the Indian companies are evenly split on the outlook for reducing the number of employees on international assignments, with half the companies likely to undertake a reduction.
The survey also focuses on human resources and says that in an environment in which they are asked to operate with reduced resources, HR continues to be considered core/strategic to most companies’ business.
Corroborating this, 27 per cent of the respondents said their companies plan to maintain their investments to improve the overall HR services.
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