Salaries in India may rise 10% in 2019, highest in Asia Pacific: Study

Salaries in the country are projected to increase by 10 percent in 2019, the highest in the Asia Pacific region, according to a report.

While noting that the salaries had risen by the same quantum in 2018, it attributed the high salary increments compared to other countries in the region to the steady economic growth, progressive reforms and cautious optimism across sectors.

The global advisory, broking and solutions company Willis Towers Watson in its Q3 2018 Salary Budget Planning Report noted that the pharmaceuticals sector has the highest projected salary increase for 2019 at 10.3 percent.

"The salaries for consumer products and retail sector will remain consistent at 10 percent owing to the green shoots of recovery in the sector's performance, increasing consumer confidence and purchasing power," it said.

It noted that the financial services sector, mainly comprising Banks, NBFCs and insurance companies, has seen a steady increase from 9.1 percent in 2017 to 9.6 percent for 2019, largely due to improved performance, higher premium collections for insurance companies and regulatory reforms.

"MNCs that typically have KPO/BPO or manufacturing operations in India will likely see average salary increases around the 10 percent mark, as in dollar terms this is not a significant increase to their cost of operations. However, Indian companies will likely see a lower salary increase which is more directly linked to their financial performance," Sambhav Rakyan, data services practice leader, Asia Pacific, Willis Towers Watson said.

The report noted that about 42.6 percent of the total salary increment budget is being allocated to top or above average performers.

"On average, 17 percent of the salary increase budget is being allocated to top performers, which represent 13.1 percent of employees in India. This implies that for each $1 allocated to an average or below-average performer, $1.31 is allocated to a top performer," it said.

The median salary increase for 2019 at executive level is projected at 9.8 percent, a marginal drop from 9.7 percent in the previous year, while for mid management and production/manual labour at 10 percent, a drop from 10.1 percent from last year.

On the aspect of variable pay allocation, it projects a decline across levels for 2019, with executive level variable pay declining from 20.7 percent to 17.4 percent, mid-management level from 12.6 percent to 10.2 percent and production/manual labour from 9.2 percent to 8.4 percent.

"The projected variable pay is conservative and a potential reason could be that only 37 percent respondents have projected a positive business revenue outlook for the next 12 months, as compared to 48 percent last year.