Corporate sentiment cautiously positive; employees can expect 12% hike this year: Mercer

Among the surveyed industries, the pharmaceutical sector, at 12%, expects the highest salary increments this year while the high-tech sector is expected to give the lowest increments at 11.5%.

NEW DELHI: India Inc will dole out an average salaryincrement of 12% this year, similar to last year's levels, according to HR consulting firm Mercer's Total Remuneration Survey 2013. The projections come just days after HR consulting firm Aon Hewitt predicted an average salary hike of just 10.3% for employees this February. "Corporate sentiment is cautiously positive, though companies are adopting a wait-and-see policy," said MuninderAnand, director for Mercer India's information solutions business, in a statement. "Performance-based pay and rewards will gain prominence in the appraisal cycle. Hiring will continue to be on the agenda for most companies in 2013," he added.

Atotal of 734 organisations participated in Mercer's All Industries Total Remuneration Survey, which included representation from seven industries — pharmaceutical and medical equipment, automobiles, chemicals, consumer goods, manufacturing, hi-tech (telecom, IT) and oil and gas. While Aon Hewitt had reduced the projected hike for this year to 10.3% from 10.7% for 2012, and called it the lowest hike in a decade barring 2009, Mercer has remained consistent in its salary projections, with projected average salary hike staying at 12% for 2011, 2012 and 2013.

Among the surveyed industries, the pharmaceutical sector, at 12%, expects the highest salary increments this year while the high-tech sector is expected to give the lowest increments at 11.5%. Other industries, including chemicals, consumer, oil and gas and manufacturing and engineering, project a 12% salary hike. The auto sector has projected a decrease in salary increments from actual increments of 12.5% in 2012 to projected increments of 12% in 2013.

About 72% of the respondents indicate recruiting for new positions and attrition backfill over the next year, though there is a 12% decline from hiring intentions in 2012. Companies are not looking at holding back increments in 2012, but are likely to be more selective, says Anand. "Companies are increasingly moving employee compensation away from a fixed-pay approach to one that relies more on variable compensation," he added.

There is an increase in variable bonus pay across industries from actual payout of 19.2% in fiscal 2011 to a projection of 19.30% in fiscal year 2012. Actual variable bonus percentage (of annual guaranteed cash salary) was highest for the hi-tech sector in 2011 at 25.50% followed by the oil and gas sector at 20.6% and consumer at 20.3%. High-tech and pharmaceutical sectors continue to lead projected variable payouts in 2012 at 25.70% and 23.50%, respectively