Business Standard

Salaries to rise 12-14% this fiscal

Better outlook for next year and need to retain talent seen as triggers

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Kausik Datta Mumbai
India Inc is planning a 12-14 per cent increase in its payroll cost for 2005-06, higher than the projected rise of 10-12 per cent, according to Cerebrus Consultants, the Mumbai-based HR management services firm.
 
This could translate into salary increments of 12-25 per cent against the projected 8-20 per cent. The gap between the rise in expenditure on payroll and the hike in increment indicates the growing difference of performance among employees.
 
"Better than projected rise in increment was a combination of factors: better performance of second half than the first half ( when the projection was made), even better outlook for next year and an urgency for the companies to retain best people," said Anita Ramachandran, CEO, said.
 
Financial services tops the list of sectors offering the highest increments, followed by information technology (IT) and the fast moving consumer goods (FMCG), barring Hindustan Lever.
 
Employees working with financial services companies, particularly stock broking firms, have received 50-100 per cent hike in their variable salary. The figure is around 30 per cent in IT and FMCG firms, barring Hindustan Lever.
 
Ramachandran said the laggards in the list are engineering, chemicals and consumer durables. "Textiles is picking up," she said.
 
According to her, difference of performance among employees is growing and the gap will even widen in the years to come. She said nearly 30 per cent of employees of an organisation falls under the highest performing bracket, while the balance get average increment hike. She hoped that if the economic growth is sustained, a lot of change is expected in "reward management."
 
Ramachandran said uncertainty over the proposed fringe benefit tax has no impact on the formulation of expenditure on employees' salary account.
 
"No company, under the present circumstances, can defer its planning on employees cost, simply because their is no clarity on a particular issue (fringe benefit tax). In that case, it shows either that the company is not confident about its profitability, or it wants to take its employees for granted," she added.
 
Fringe benefit tax, she said, is actually a fringe expenditure tax. "The nomenclature of the proposed tax creates the problem. Employees deprive no benefit from the items which are proposed to be brought under the tax net," she added.
 
The Mumbai-based HR consultancy management firm has advised over 100 companies including multinationals and domestic in diverse industries and has carried out assignments in Bangladesh, Pakistan and Sri Lanka as well.

 
 

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First Published: Apr 05 2005 | 12:00 AM IST

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