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2013 pay rise: India Inc to give 12% more, says Mercer survey

72% firms surveyed indicate buoyant hiring; more stress on variable compensation during tough times

M Saraswathy  |  Mumbai 

Indian employees can expect a 12 per cent salary increase in 2013. A ‘Total Remuneration Survey’ issued today by human resource firm says a 12 per cent salary rise, overall, is expected across sectors in 2013.

It says 72 per cent of the surveyed indicated buoyant hiring intentions in 2013. This is a 12 per cent decline from 2012. Among the sectors surveyed, pharmaceuticals expects the highest salary increment at 12.5 per cent, while the automobile sector has seen a dip in salary projections for 2013. says 51 and 56 per cent of in India are looking to increase headcount in sales and engineering functions, respectively.

The survey said the overall average variable bonus payout was 19.2 per cent across sectors in 2011, with the hi-tech sector reporting the highest at 25.5 per cent in 2011.

Muninder Anand, director with India’s information solutions business, said, “Double-digit salary hikes will be there but there is a big focus on performance and higher pay for good performers. Corporate sentiment is cautiously positive, though are adopting a wait-and-see policy. Our research suggests companies are not looking at holding back increments in 2012 but are likely to be more selective.”

The pharma sector projected the highest salary increase, of 12.5 per cent for 2013. Hi-tech was next with 11.5 per cent.

The automobile sector showed signs of a decrease in increments, from 12.5 per cent in 2012 to a projected 12 per cent in 2013. While companies continue to budget for double-digit increments, there appears to be a strong sentiment to contain costs, leading to companies re-evaluating their budgets,” said the survey.

The survey showed a huge difference between annual guaranteed cash to individuals, as one moved up the ladder of hierarchy in organisations. A 189 per cent difference was observed in the annual guaranteed cash of the staff category and the junior management category. The difference in annual guaranteed cash was 110 per cent between management and top management. Anand said the trend was expected to continue.

There is an increase in variable bonus pay across sectors, from the actual payout of 19.2 per cent in 2011 to a projection of 19.3 per cent in 2012. Actual variable bonus percentage (of annual guaranteed cash salary) was highest for hi-tech in 2011 at 25.5 per cent, followed by the oil & gas at 20.6 per cent and consumer goods at 20.3 per cent.

The actual average variable bonus for heads of organisations in the consumer goods sector was highest at 34.7 per cent in 2011. Pharma showed 32 per cent in 2012.

“In the current business environment, cost optimisation is inevitable, leading to organisations operating within tight budgets and effectively motivating the workforce or high performers. In view of this, companies are increasingly moving employee compensation away from a fixed-pay approach to one relying more on variable compensation. Many employers are considering a ‘total rewards’ approach to compensating employees,” added Anand.

Overall attrition in 2011 was 15 per cent, with the highest in hi-tech, at 17.9 per cent.

Mercer’s India Total Remuneration Survey-All Industries is a detailed study across sectors and career levels covering all facets of rewards and benefits within an organisation. As many as 734 organisations participated in the 2013 survey, from seven sectors — & medical equipment, automobiles, chemicals, consumer goods, manufacturing, hi-tech (telecom, information technology) and oil & gas. The survey is conducted twice a year.

First Published: Thu, March 07 2013. 00:20 IST