Corporate salaries unaffected by economic slow down

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20 August, 2008 04:47:04

Leading corporates in India have registered an increase in average salary despite this year's economic slowdown, a study said.

The year 2008 has seen a strong average salary increase of 14.8 percent, according to Hewitt Associates study conducted to understand the impact of economic slowdown on compensation and salary trends.

"Contrary to expectations, there hasn't been any dramatic move to downbeat macro-economic factors on compensation," leader of Hewitt's rewards consulting practise in India Sandeep Choudhuary said.

"Instead, companies are looking at innovative ways to cut other cost like travel and recreation without compromising on employee salaries or learning and development," he added.

However, the global economic slowdown, US sub-prime crisis and rising inflation have prompted the companies to revise budget for 2009, during which the average salary is expected to dip at 13.9 percent, the study said.

Of the organisations surveyed, 60 percent said inflation and rising input costs had been discussed and considered in the context of salary increase budget for 2009.

Companies are looking at balancing the pressures of inflation and lower HR budgets by increasing productivity (57 percent) and re-deployment of manpower (31 percent).

Meanwhile, 30 percent of them stated that they have increased performance linkages to counter fixed pay increases.

Only 20 percent of the organisation surveyed mentioned a hiring freeze or slowdown.

While 25 percent of the companies surveyed are considering reduction in staff budgets, with cuts largely in the areas of travel and recreation, only nine percent of the companies mentioned a reduction in training budgets.

However, only one percent of the companies were looking at increasing work hours to manage rising costs of business, while four percent of them mentioned a promotion freeze, all being from the IT, ITeS and BFSI sectors.

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