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The global human resource firm said that this was in sync with the 5% growth expectations. The study shows a wide variance of salary increases across sectors. Financial services, technology, outsourcing have seen the greatest volatility and would remain cautious in 2013, the survey said. On the other hand, consumer & industrial sectors which so far have been resilient, also reported conservative increase projections.
Sandeep Chaudhary, Partner-Talent & Rewards at Aon Hewitt India said, "In sync with the economic outlook, 10.3% increase is among the lowest the country has seen in a decade (barring the sub-prime crisis year). Though business sentiment is strengthening on account of inflation reaching a three year low and stock markets rising upwards, the cautious streak is evident in the projected salary increase numbers."
Top Management increases have fallen the most over last 6 years. The projected salary hike is 9.3% in 2013, compared to 11.1% in 2012. This is due to increasing dispersion in salary increases with a view to sustain and manage within limited budgets and reduce impact on the overall wage bill.
The survey said that with shrinking salary budgets, organisations are creating sharp differentiation in salary increases between their key talent and the rest of the population. This year, key talent (Hi-Potentials, Hi-Performers & Critical Talent) is projected to get an average increase of 14.1%. Chaudhary added that cost consciousness and performance orientation are the key themes this year.
Over 40% of the organisations surveyed have reported an average dip of 2% from last year. However, key talent will continue to get a disproportionate share with average increases projected at 14.1%.
According to Aon Hewitt, corporate India reported an average overall attrition of 19.3% for 2012. "With a growing recognition that key talent is a sustainable competitive advantage, organisations are reshaping their strategies to safeguard this talent group. This is also reflected in the lower average attrition number for key talent at 5.7%," said the survey.
In terms of the various sectors, pharmaceutical industry in India, with a 3-year CAGR of 12.4% and projected CAGR of 15.3% is a front runner in salary increase amongst all sectors with 13.5% projections for 2013. Driven by macroeconomic and sector-specific challenges such as delays in clearances, lack of funds and projects getting postponed, the Infrastructure sector is projecting relatively lower salary increase at 6.1%.
For the financial industry, average salary increase projection stands at 8% with securities closing in at 6.6%, banking at 8%, and life insurance at 8.7%. Aon Hewitt said that the telecom industry, challenged by myriad business and regulatory issues continues to lag the salary increase space with projections for 2013 at 9.6%.
While Hi-Tech Industry posted an average salary increase of 10.5%, .IT service organisations projected a conservative salary increase of 9.6%. In the face of considerable global uncertainty, the Indian ITeS industry projects an average increase of 10.1% for 2013. BFSI captives and other captives are projecting salary increase at 10.2%.
A majority of organisations (93%) made a bonus payout in 2012, Aon Hewitt further said. However, organisations reported reduction in quantum of variable pay awards. This is one of the strategies being adopted to contain costs and ensure a tighter alignment to performance. "While companies have not reverted to reducing coverage and eligibility of employees receiving variable pay awards, they are definitely re-examining the measures and metrics used to assess performance, ensuring strong linkage between individual performance and payout," said the survey report.
Aon Hewitt surveyed over 500 organizations representing 20 primary and 30 secondary industry sectors. The study measured actual and projected salary increases, and compensation practices for five specific job categories, namely top/senior management, middle management, junior manager/professional/ supervisor, general staff, and manual workforce. The data for the survey was collected over December 2012-January 2013.
