2021 Workforce Increment Trends Survey | Deloitte India has been saved
2021 Workforce Increment Trends Survey | Deloitte India
Average India increment expected to increase from 4.4 percent in 2020 to 7.3 percent in 2021: Deloitte report
New Delhi, 18 February 2021: Phase-1 of the 2021 Workforce and Increment Trends Survey by Deloitte Touche Tohmatsu India LLP (DTTILLP) provides India-specific insights on increments, workforce composition, performance management, and other HR strategies.
According to the survey findings, 92 percent companies plan to give an increment in 2021 compared with only 60 percent in 2020. Average increment for companies in India is expected to go up to 7.3 percent from 4.4 percent in 2020. This 7.3 percent projected increment is lower than the 8.6 percent average increment in 2019. The increase in increment budgets is in line with the faster-than-expected economic recovery, revival in business and consumer confidence, and early signs of improving corporate profitability.
Anandorup Ghose, partner at DTTILLP, said, “COVID-19 has made year-on-year analysis tricky as 2020 has been an anomaly, making 2019 a better year for comparison. Average India 2021 increment of 7.3 percent is still considerably lower than 8.6 percent in 2019. While business activity is rebounding quickly, organisations are managing compensation budgets responsibly considering their affordability and sustainability of fixed cost increases.”
Per the survey results, 20 percent companies plan to give a double-digit increment in 2021 compared with only 12 percent in 2020. The survey also finds that of 60 percent companies that gave an increment in 2020, a third of them did that through off-cycle increments. Interestingly, of the companies that did not give an increment in 2020, only about 30 percent plan to compensate employees for the previous year through higher increments and/or bonuses.
“HR and leadership teams in India Inc. have shown tremendous maturity in decision-making to responsibly deal with the impact of COVID-19. Post March 2020, most companies decided either not to offer increments or defer them until they got more clarity. About 25 percent companies even extended a pay cut to senior management. Organisations largely preferred saving jobs of most to offering higher increments and bonuses to a few. Given that the risks related to the pandemic are not over yet, it is no surprise that they are treading with caution,” added Anandorup Ghose.
The study finds that every sector is expected to give a higher increment in 2021 compared with the year gone by. The life sciences and Information Technology (IT) sectors are expected to give the highest increments, whereas the manufacturing and services sectors continue to offer relatively lower salary increases. Life sciences is the only sector that will be able to match its 2019 increment levels. For others, average increment in 2021 is expected to be lower than 2019. Only digital and e-commerce companies are expected to offer double-digit average increments in 2021. Increments are likely to be the lowest in hospitality, real estate, infrastructure, and renewable energy companies. Please refer to the Appendix for sector-specific 2021 increment projections.
Other key findings from the Survey
Organisations continue to use individual performance to differentiate increments across employees with top performers expected to get 1.7 times the increment given to employees who “meet expectations”. It is interesting to note that companies expect to place fewer employees in the “below expectations” category this year. The percentage of employees expected to be promoted is likely to increase from 7.4 percent in 2020 to 10.2 percent in 2021. Average additional increment to promotees is expected to go up from 5.4 percent in 2020 to 6.9 percent in 2021. While most companies are not planning to differentiate increments by employee location, senior/top management employees are likely to get a lower increment of 6.0 percent in 2021. Other factors affecting individual increment differentiation are employee potential and compensation positioning.
The survey found that, while at an all-India level, voluntary attrition reduced from 14.4 percent in 2019 to 12.1 percent in 2020, involuntary attrition (layoffs, restructuring, etc.) increased from 3.1 percent in 2019 to about 4 percent in 2020. Involuntary attrition increased the most in the IT and services sectors, whereas voluntary attrition reduced across sectors. The survey also points towards the constantly evolving workforce with 16 percent white-collar employees in India being born after 1994 (“Gen-Z”) and 22 percent of the total workforce being women. Although the gender diversity ratio remains skewed, some organisations take initiatives to improve this and promote an overall culture of diversity and inclusion at the workplace. In terms of other priorities for 2021, most organisations identified greater adoption of technology in HR, employee wellness, and continued investment in learning and development as the top three focus areas.
The 2021 Workforce and Increment Trends Survey was launched in December 2020 as a B2B India-specific survey. The primary audience for this survey was seasoned HR professionals. About 400 organisations participated in this edition spread across seven sectors and 25 sub-sectors. The responses received from the participants were validated and checked for accuracy and intended interpretation. India, wherever mentioned in the document, reflects the collective views of only the survey participants.
Kindly note that 2021, 2020, and 2019, wherever used in this press release, refer to the fiscal years 2021−2022, 2020−2021, and 2019−20, respectively.
This press release has been issued by Deloitte Touche Tohmatsu India LLP.
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