salary increment in 2021 to be higher than last year: Survey

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• Average salary increment in 2021 will be higher than 2020
• A survey has indicated that average salary increment this year will be 4.4 per cent higher in 2021
• Services sector employees are likely to see the lowest average salary increment in 2021

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According to the survey, the average increment this year will be 7.3 per cent, which is almost 4.4 per cent higher than the 2020 figure. However, it is still lower than the 8.6 per cent increment given by companies in 2019.

While the average salary increment at 7.3 per cent is better than 2020, it is unlikely to have any impact on the salaries of senior and top management. For them, the average salary increment in 2021 may not exceed 6 per cent.

The recent survey was based on responses from 400 organisations across seven sectors and 25 sub-sectors.

Only 20 per cent of the surveyed companies said they were exploring the prospect of giving double-digit increments to employees. As far as sectors are concerned, life sciences is expected to get the highest projected average increment payout of 9.2 per cent, followed by the IT sector (8.6 per cent) and consumer products sector (7.6 per cent).

On the other hand, employees working in the services sector are likely to see the lowest average salary increment at 5.9 per cent. The sector was hit hard during the initial days of the Covid-19 pandemic and many businesses continue to struggle financially.

Anandorup Ghose, a partner at DTTILLP, highlighted the fact that Covid-19 has made year-on-year analysis tricky as 2020 has been an anomaly, making 2019 a better year for comparison.

“Average India 2021 increment of 7.3% is still considerably lower than 8.6% in 2019. While business activity is rebounding quickly, organisations are managing compensation budgets responsibly considering their affordability and sustainability of fixed cost increases,” he said.

Fifty-five per cent of the surveyed companies said they will not compensate employees who faced a salary cut last year, according to the survey. Only 12 per cent plan to give a higher increment and 13 per cent are looking to offer a one-time retention bonus.

“Organisations largely preferred saving jobs of most to offering higher increments and bonuses to a few. Given that the risks related to the pandemic are not over yet, it is no surprise that they are treading with caution,” Ghose added.

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