Salaries in India are expected to increase by 16 per cent in 2009, one of the highest in the Asia-Pacific region driven by strong economic growth and pressure on employers due to soaring inflation, a latest report said.
As per a report by the Hong Kong based compensation firm HR Business Solutions (HRBS) pay increases in the Asia-Pacific region are likely grow even as the economies are expected to be impacted by the global slowdown.
"The forecast pay increase in India averaging 16 per cent is one of the highest among all the countries," the report stated. The HRBS 2009 pay increase forecast is based primarily on four economic factors — GDP growth, inflation, unemployment, manpower demand and past pay increase trends.
Elaborating further it said that the Indian economy is reported to be cooling, but still it is expected to achieve a growth rate of 7-8 per cent in 2008, which is among the strongest in the region after China.
"In addition, it has the fourth highest inflation rate of over 12 per cent in 2008 which increases pay rise pressures on employers. Labour demand is still robust and there is a lack of sufficient supply of the skills-set required by India's rapidly growing services, manufacturing, construction and retail industries to boot," the HRBS report added.
Economic growth rates in Asia are mostly forecast to be moderately lower in 2008 relative to 2007, while inflation rate across the Asia-Pacific region has soared to an all-time high.
"In many of the Asian countries, demand for manpower continues and in some cases, while general unemployment rate remains high, the labour market is extremely tight for qualified employees, for example, India, China and Vietnam," it stated.
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Besides, in some developed economies such as Hong Kong, Singapore and Australia, while the unemployment rate is low, the demand for people has been strong.
Meanwhile, Sri Lanka is the other country which is forecast to see a higher double-digit rise in salaries of about 17 per cent in 2009. The country's inflation rate of more than 16 per cent is the next highest in Asia after Vietnam and firms in Sri Lanka are hiring and facing challenges in recruiting and retaining skilled human capital.
Most of the neighbouring countries of India - Pakistan, China and Bangladesh are forecast to post around 11 per cent of expected pay increase.
In 2008, the salary increase in India had averaged at 14.9 per cent.
Other Asia-Pacific countries like China, Vietnam and Indonesia are forecast to see a rise of 11 per cent, 12.4 per cent and 12.7 per cent, respectively in 2009.
Earlier, in a separate report on Asian compensations, global HR consultancy Mercer had forecast that India was likely to witness over 14 per cent increase in salaries annually for the next three years as the corporates were facing shortage of talent.
The Mercer report had also stated that India, Vietnam and Indonesia were the only three countries in the Asia-Pacific region which are likely to see a double-digit increase in salaries until 2011.