Salary Hike in 2021: Survey says Bad Days Over as Companies Eye Big Recovery

Salary Hike: Frustrated with salary deductions? It seems bad days for employees working in the service sector might just be over as companies will be providing a salary hike in 2021. The pay hike is expected in almost 87 per cent of companies who are expecting sharp growth in business post lockdown.

New Delhi: Better days seem to be ahead for employees in India. A report published in the global human resource consultancy, Aon has said that Indian companies are set to give a better pay hike in 2021 based on the economic recovery post coronavirus lockdown. This comes as good news for lakhs of employees, especially in the private sector who had to suffer job losses or pay cuts.  This also means the gloom set in the market due to Covid-19 forced salary deductions will be a thing of the past, come 2021.

According to a Bloomberg report, at present companies are betting on higher consumer demand due to enhanced government spending and bumper rainfall to neutralize the pandemic-led economic contraction. Therefore, companies, spanning sectors including e-commerce, energy, financial institutions and pharmaceuticals are expected to offer  7.3% hike on average to their employees in 2021.

2020 – The worst in a decade for employees

In 2020, the average hike offered was 6.1% – lowest in last 14 years. Aon survey collected data from 1,050 companies across 20 industries.  The report also found that the wage growth in India has been the slowest in a decade.

The survey noted that even though an inflated pay hike is not a given next year, at least 87 per cent of the companies are planning pay hikes compared to 71 per cent in 2020. While 47 per cent of the companies are likely to offer over 8% hike compared to 44% in 2020, around 14% companies are expected to offer zero pay hike in 2021 versus 29% this year.

Speaking to Mint, a partner at Aon, and CEO of the firm’s Performance and Rewards Solutions practice in India, Nitin Sethi said, “Despite the gravity of the COVID-19 pandemic in India and its deep impact on the economy, organizations in India have shown tremendous resilience and a mature view on talent,” said Nitin Sethi.

“Business and HR leaders made hard decisions in the second and third quarters of 2020 and are now betting on the green shoots of improving consumer demand. They see the need to invest in talent as a critical part of their recovery and growth prospects,” Sethi added.

Navneet Rattan, Director at Aon in India’s Performance and Rewards Solutions practice said the impact of COVID-19 has been “varied on different sectors and organizations. We see high differentials in salary increases – both intra and inter-industry. The difference between industries with highest increase to lowest increase hits 7.2% points as compared to mere 2.4% points in 2019.”

Sectors that will be contributing majorly to this salary hike

Technology, life sciences, e-commerce, chemicals and professional services are expected to offer the highest salary hike, the Aon survey found.

There will be good news for people in hospitality, retail and real estate sector as they are most likely to see a strong recovery.