The Telegraph
Since 1st March, 1999
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The pay party is still swingin’
- Survey projects a bigger double-digit hike year

New Delhi, Jan. 29: Just as the debate begins to hot up over how real the feel-good factors in the economy are, here comes the clincher: pay packets this year could swell by 9.7-13.4 per cent.

Hewitt Associates, the global human resources outsourcing and consulting firm, has just come out with its eighth annual survey of salary increases in India Inc and it is bound to spread good cheer.

Hewitt forecasts another year of double-digit pay rise — higher than the 9.5-12.6 per cent registered in 2003.

The independent outfit’s forecast, based on its survey of 521 companies across 23 industry groups and covering 650,000 employees, caps a year of strong performance by India Inc and, in a tangential way, allows finance minister Jaswant Singh to take some credit for coming good on his budgetary promise of ensuring “grihini ke tukdi me anna (more money in the housewives’ purse)”.

What is even more encouraging is that the survey found that only 0.2 per cent of the respondents were projecting the need for a salary freeze against 4 per cent in the previous poll.

The survey classifies employees into five groups: senior/top management, manager, technical/supervisor, clerical/support, and manual workers.

For the fourth year in a row, the employees in the professional/supervisor/technical group saw the highest average salary increase at 12.6 per cent. This group is projected to get an even higher salary increase of 13.4 per cent in 2004.

Head honchos can look forward to an 11.8 per cent pay rise this year while managers can count on a 12.7 per cent gain. Clerical staff pay increases are forecast at 12 per cent while manual workers – the lowest in the heap -- are likely to get wage hikes of about 9.7 per cent.

In 2003, the IT-enabled industry – which rode a business process outsourcing (BPO) wave as overseas jobs washed up on Indian shores – handed out the biggest pay increase of 13.8 per cent.

The others on the totem pole were software development (13.7 per cent), IT solution 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).

However, 2003 was a dog year for bankers who got a pay rise of just 7.6 per cent. Other poor paymasters were financial services (7.8 per cent), insurance (8.2) and engineering/power/construction (8.3 per cent)

The survey found that salary increase ranged from 9.5 to 12.6 per cent in 2003 as compared with increases between 7.7 to 10.9 per cent in 2002.

Chennai reported the highest average salary increases of 13.5 per cent in 2003, followed by Bangalore and Calcutta, with increases of 12.5 and 11.5 respectively.

The study also showed that the link between pay and performance was becoming stronger. The results showed that an outstanding performer typically earns more than twice the salary increase earned by an average performer. Nearly 85 per cent of respondents reported having a variable pay plan in 2003.

Almost half of the organisations reported using long-term incentive awards including stock options, performance shares/units, restricted stock and other equity linked vehicles such as phantom stocks and employee stock purchase plans.

The report said the job groups that were ranked as the most challenging to fill in 2003 were IT, Operations and Sales. The highest attrition rates came in the entertainment/ communications/publication industry (26 per cent), followed IT-enabled industry (23.4 per cent).

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