Almost one-fourth of the companies surveyed in India have opined that real wages to their managerial-level employees have either been flat or declined over the last five years, a study has said.
The clerical, administrative and employees, who are compensated on an hourly basis, have actually been hit harder with over 25 per cent of the firms surveyed reporting that real wages had either been flat or declined, said Towers Watson's Global Talent Management and Rewards Study 2010.
However, the incidence of real wage decline or stagnation for managerial-level employees over the past five years for Japanese, US and Chinese companies is higher at 71 per cent, 59 per cent and 47 per cent, respectively, it said.
This interesting revelation is in stark contradiction to the acknowledged fact, which the survey also endorses, that economic growth continues to drive increases in the real value of rewards in Asia, including India.
"While India has an impressive growth rate which is second only to China, the reason for the real wages being flat or declined is the high inflation rate that the Indian economy has been grappling with," the study said.
It also stated that the drop or the flattening in real value of wages to the managerial staff in almost one-fourth of the companies surveyed is "disturbing" since a majority of the firms surveyed believe they offered opportunities to earn significantly higher levels of compensation to their professional/managerial cadre.
On HR interventions by Indian companies to combat the economic slowdown, the survey reveals that only 15 per cent resorted to lay-offs, as compared to 50 per cent in Japan, 46 per cent in Hong Kong and 29 per cent in Singapore.
"The bulk of Indian companies employed softer measures like a hiring freeze (61 per cent), reduced bonuses (46 per cent) and salary freeze (35 per cent)," the study said.
The survey captures the current landscape of rewards and talent management representing 1,176 companies across 17 locations, which includes firms in India across diverse sectors, including manufacturing, financial services, high technology, healthcare, pharmaceuticals and retail.
As a consequence to real wages getting hit over the past few years, almost 75 per cent of the companies in India over a period of the next 12 months, would increase salary and budgets if they are able to generate additional funds to spend on labour costs, the study said.
Another 55 per cent of the firms reported that they would increase bonus opportunities, while 34 per cent reported that they would increase bonus eligibility.