Staff pay packet may go up 13% this year as hiring jumps

Vivek (CA ) (2368 Points)

09 March 2011  
A boom in jobs like the one India saw in 2007 may still be a few years away, but 2011 will bring good tidings for employers across most industrial sectors. That is reflected in the expectation of the biggest jump in hiring since 2005 coupled with a near doubling of the expected pay hike over the corresponding figure for 2009.

In the coming year, Indian companies plan to shower their staff with an average salary increase of just under 13%. That’s higher than the actual hike of 11.7% in 2010 and 6.6% in 2009, reveals an annual salary survey done by Aon Hewitt , a global HR consultancy group.

This is a more optimistic projection than the one put out by another HR consulting firm, Mercer, a few days ago; Mercer expects average overall salaries to increase by 12% in 2011. Such expectations will come as music to employees’ ears, although they are still short of the increases seen in 2007 just before the global financial crisis erupted; average salaries in that year were up by 15.5%.

Still, the projected increase ties in well with the fact that India is experiencing a solid growth phase in hiring. A quarterly study by HR solutions firm Manpower reveals that more than half of the 5,000-odd Indian employers surveyed expect headcount to increase in the April-June quarter.

In comparison, only 36% of the employers during the same period last year had optimistic hiring plans. India is the only country in the Asia-Pacific region where double-digit hikes are expected.

“Double-digit increases will continue in India for the next several years and are expected to be in the range of 12-15%. This positive growth estimate is owing to sustained increase in domestic consumption, investment in infrastructure, continued momentum in services and efforts towards fiscal consolidation,” said Nitin Sethi, India practice leader for broad-based compensation at Aon Hewitt.

The biggest beneficiaries are likely to be those in the engineering services segment, with an average salary increase of 14.4%, followed by automotive and energy at 14%, and infrastructure at 13.9%. If these sectors are in a position to offer handsome hikes, it’s because of the growth phase they are in. Consider automotives, for instance, where Maruti Suzuki is a perfect example of a company that’s riding a boom.

“The automotive sector is growing at 25-30%, and this growth is going to continue in the coming years with huge investments planned ahead by most players. It’s natural that competitive salaries will be offered and people will be hired in large numbers,” says SY Siddiqui, chief managing executive-HR, administration, Maruti Suzuki.

The company itself plans to expand capacity to 1.75 million cars by 2013, from 1.1 million cars currently. Two new plants that have come up in Manesar will each add 2,50,000 cars. Accordingly, the company will bring on board 1,500 new hires in fiscal 2011; that is up from 800 new people for the past few years till 2010.

Executives in the fast-moving consumer goods sector say higher salaries are indicative of the aggressive poaching that rival industries are resorting to. FMCG salaries are expected to be higher by 13.4% in 2011.

“The industry is a great poaching ground for high growth sectors like telecom, banking, insurance as people from FMCG are well-exposed to various functions from supply chain to sales and marketing. As a result, players in FMCG have become aggressive in terms of salary, stock option plans and variable pay. The sector has to retain talent if it has to sustain its own double-digit growth,” says A Sudhakar, executive director, HR, Dabur India.

The good news is that the boom in salaries and in hiring is broad-based. “All sectors are showing robust hiring pace and creating jobs in large numbers. Hiring intent in the manufacturing sector is the most positively reported by employers,” said Sanjay Pandit, managing director of Manpower India .