Average salary hike this year for employees is projected to be 11.2 per cent,lower than over 12 per cent increase last year,as companies are grappling with sluggish economic activities,says a survey.
Many organisations are considering a double-digit hike primarily on account of double-digit inflation that prevailed over much of 2011,according to the survey conducted by HR services firm Ma Foi Randstad.
The estimates are based on a survey of more than 400 companies between January and February this year.
“The average compensation increase for the year 2012 has been predicted to be around 11.2 per cent… lower in comparison to last year’s 12.4 per cent average increase,” Ma Foi Randstad report said.
Ma Foi Randstad MD & CEO E Balaji said that with slow economic growth and inflation in the last two quarters of FY2011,business sentiments have not been very robust.
“Inflationary pressures in other markets such as the EU and USA have also affected the economy adversely. Hence,organisations are currently being cautious in terms of hiring and expansion,” he said.
On the other hand,the survey said that double-digit increase is moderated to some extent through a lower variable payout. The actual variable compensation realised by employees was observed to be in the range of 70-85 per cent of the targeted variable compensation.
“The variable compensation is expected to be in the range of 20-25 per cent for senior management with middle and junior management people having a variable compensation of 13-16 per cent and 8-10 per cent,respectively,” the report said.
Balaji said organisations have started giving prominence to planning and distributing the average compensation increase to differentiate between high and low performers.
“This trend is expected to bring in healthy change in the industry,” he added.