Increments for India Inc are few and far between in a COVID-19 world

According to a Deloitte survey, only 4 of the 10 surveyed companies in India have given an increment in 2020 and 33% companies have decided not to give an increment at all.
Man writing on paper
Man writing on paper
Written by:

It has been a long few months of salary cuts, furloughs and job losses, and India’s companies are finally getting back on their feet as the economy opens up. But for those looking for a bump in their salary, that seems to be unlikely.  Many employees in multinational corporations expected to receive their increments this fiscal, but that is not the case anymore because of the pandemic. 

"Employees who are in mid and senior profiles got an increment at the end of 2018. We thought that we would get an increment in 2019 but that did not happen. Then it was expected that the company would hand out bonuses like they normally do in March-April. That however did not happen thanks to the pandemic," an employee with a multinational tech company said.

Another employee from a large Indian MNC said that while their hikes are usually subdued, nobody has been given a hike this year, no matter how their performance has been. Despite this, the employee says, productivity has been at its peak, and no one wants to give any reason to be on the chopping block next time.

According to the 2020 Workforce and Increment Trends survey by Deloitte Touche Tohmatsu India, for which 350 organisations across seven sectors and 25 sub-sectors were surveyed, only four of the 10 surveyed companies in India have given an increment in 2020 and 33% companies have decided not to give an increment at all.

According to the survey, the average increment for 2020−2021 fiscal year is at 3.6%, which according to the survey, is the lowest in decades. This is less than half of what employees received during the 2019-2020 fiscal year, when it stood at 8.6%.

“If we only consider organisations that gave an increment, the average increment in 2020 is 7.5%. Less than 10% companies have given an increment equal to or more than 10% in 2020 and the proportion of such companies has dropped drastically since the start of the lockdown in March 2020,” the survey notes.

According to the survey, two factors have influenced these decisions: COVID-19, and timing of the increments. Those who had decided prior to March 2020 regarding increments have given higher increments as compared to those who didn’t. In addition, the survey report states that organisations which are expecting a decline of over 20% in revenue due to the effects of the pandemic have given low increments.

No industry witnessed an average double-digit increment in 2020, the survey’s results showed.

The life sciences industry topped the list when it came to giving increments for this fiscal year but even the digital/e-commerce industry which is so far known for giving double-digit increments has also struggled to match what it gave previously, the survey adds. As expected, the lowest increments were in the sectors hit the hardest — in the manufacturing and services sector, particularly in the real estate, construction, metals and mining, hospitality, retail, and automobiles industries.

Anandorup Ghose, a partner at Deloitte Touche Tohmatsu, said, “Pay increases have been slowing in India over the past few years in line with the trajectory of the economy and rising margin pressures. However, with COVID-19 pulling the global economy into a recession, organisations have had no choice but to reduce or halt increments as they evaluate every incremental rupee spent. When revenues are harder to come by, companies usually go into a cost-saving mode.”

As opposed to how things worked previously, organisations are taking into account the likely future performance while deciding increment budgets, he added.

As per Deloitte’s survey, things are unlikely to look up in 2021-2022 either. Of those surveyed, only 23% of companies said that they plan to give increments, and many are undecided. Only 38% of those who gave increments this year plan to do so in 2021.

However, according to TeamLease Jobs & Salaries Primer Report 2020, employers are cherry-picking super-specialised profiles and are rewarded with greater than 15% salary growth.

Salaries, in general, grew between 4.26% (minimum) and 11.22% (maximum) across sectors and cities, according to its report. But overall, businesses are conservative with salary increments.

"In fact, the pandemic has amplified the importance of skilled profiles in the world of work. It has brought to the forefront the trinity between skills, performance and rewards," said Rituparna Chakraborty, co-founder & executive vice president, TeamLease Services.

"Filling one's armoury with skills that will help in driving outcomes either through up-skilling or re-skilling is the way forward for talent to stay in demand and to command the desired compensation," she said.

The report further said sectors with significant work-from-home (WFH) profiles are expected to benefit on account of business continuity. These include banking, financial services and insurance, e-commerce & tech startups, Information Technology and knowledge services.

Related Stories

No stories found.
The News Minute
www.thenewsminute.com