The average salary increase in 2013 is set to be the lowest the country has seen in a decade, according to a recent survey.

The Annual Salary Increase Survey, released by HR consultancy firm Aon Hewitt, has predicted that India Inc would dole out an average salary hike of only 10.3 per cent this year.

A sector-wise analysis shows that the pharmaceutical industry could witness the maximum hike of 13.5 per cent in 2013, while FMCG (fast moving consumer goods) a salary hike of 12.3 per cent.

“In sync with the economic outlook, 10.3 per cent increase is among the lowest the country has seen in a decade (barring the sub-prime crisis year). Though business sentiment is strengthening on account of inflation reaching a three-year low and stock markets rising upwards, the cautious streak is evident in the projected salary increase numbers,” said Sandeep Chaudhary, Partner, Talent & Rewards, Aon Hewitt India.

While India’s growth is at a decade low, corporate India reported an average overall attrition of 19.3 per cent in 2012. However, key talent continues to get a disproportionate share with the average increase projected at 14.1 per cent.

“Wage inflation will be a high pressure point for sectors where wage cost is a significant part of operating expenses and revenues. Sectors where wage cost is relatively a small ticket item, the minimum fair pay increase will remain strong,” Mr. Chaudhary added.

The study reveals a wide variance of salary increases across sectors.

Financial services, technology and outsourcing are among the sectors that have experienced the maximum volatility, and, as a result, are likely to be cautious in 2013. Consumer and industrial sectors, which so far have remained resilient, also reported conservative increase projections.

The report also identifies a shift in the way increments are being managed in organisations. The impact of shrinking salary budgets has led organisations to create sharp differentiation in salary increases between their key talent and the rest of the population.

This gap seems to be steadily widening.

“Cost-consciousness and performance-orientation are the key themes this year. Organisations are looking at compensation and productivity together, and, hence, closely evaluating the return on compensation spent,” Mr. Chaudhary added.

The report also credits India’s projected salary increase at 10.3 per cent as fifth highest across the world.

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