Due to COVID-19, only a few firms gave increments to their employees. The wages hikes were merely 7% on average due to the economic slowdown and pandemic. Across all the sectors, the average hike has dropped to 3.6%, which is an all-time low. In the previous year, over 90% of companies gave approximately 8.6% increments to their teams.
Deloitte Touche Tohmatsu (1) found these data from their 2020 Workforce and Increment Trends Survey. Over 350 companies from seven sectors and 25 sub-sectors took participation in the survey.
The life sciences and IT were among the only few sectors that gave salary hikes to their employees. Even here also, the average increment was only about 7%. The lowest raises were approximately 2% by manufacturing and other services firms, the worst affected areas due to COVID-19 lockdown.
The Drop-in Salary Escalation Observed Since 2018
The overall salary hike is dropping since 2018. Most of the companies are preferring to retain their existing salary increases or diminish it. For example, the salary hike decreased to 6.7% in 2020 to 8.3% in 2018 in services and sciences. The entirety of the many reasons for it is the high inflation rate. The rate of 3.5 to 4% makes it an untenable 10% increments given in the early years.
As per Anandorup Ghose, partner at Deloitte Touche Tohmatsu India, companies were already proceeding to cut the increment. The COVID-19 only accelerated the pace.
Ghose further added that over 90% of firms were considering reviewing the play plans as per the survey. They are looking forward to a variable pay component, which is a massive shift. He also stated that previously, in the pre-COVID world, companies were mainly deciding increments based on the performance of the previous year. However, now organizations are considering the likely performance in the future while making an increment budget.
For the 2021 outlook, one in four organizations is considering giving hikes; however, it may be lower than the previous years. Ghose further stated that even though we may see very low increments next year, a particular group of highly skilled or key talent people may get a good hike.