When it comes to pay hikes, Indian pros outdo all

Here’s a bit of good news for salaried professionals in India. A new survey said that employees in India are expected to get the biggest pay hikes in 2006 — outpacing even countries like China, Japan, UK and US — with a 11.3% increase year-on-year.

According to the survey by Mercer Human Resource Consulting, a leading employee benefits consultancy services provider, the sustained growth in the country’s economy and low inflation rates will be the biggest contributors to this wage hike.

The survey said average wages in India will increase 11.3%, outpacing inflation by 7.3%. In comparison, the average global salaries are forecast to rise by 2.4 percentage points above inflation in 2006 as against 1.9% this year.

While this is surely good news for employees in India, development industry experts warned that this could hurt the country’s competitiveness. Analysts pointed out that the sharp hikes could hurt the interests of hi-tech firms as Western clients may be encouraged to shift jobs to smaller Indian cities, and even other countries.

Average pay in 7 in 10 (69%) of the countries covered, including UK and US, is predicted to increase by between 1 and 3.5 percentage points above inflation. The study also found a minority of countries will experience rises which are over double the global average.

The greatest increases are expected in India, Egypt and Lithuania where employees are forecast to receive pay rises of 7.3%, 7.1% and 5.5% above inflation respectively.

“We’ve seen strong global economic growth in the past couple of years and all the signs indicate this is set to continue in 2006. With this growth and more stable inflation, we anticipate next year’s pay rises to be higher, in real terms, than this year’s,” said Greg Cornish, global head of human capital advisory services at Mercer.

Salary increases in Asia Pacific countries are expected to vary greatly. For example, employees in India and China — where economic growth is being driven by investment from the US — are expected to receive pay rises of around 11.3% and 7.8% respectively. Inflation in these countries is predicted to be relatively low, at 4% and 3%.

A similar survey by Hewitt Associates had last month stated that Indian workers, particularly with high-tech and clerical jobs, are projected to take home some of the highest pay raises in Asia next year.
The pay of Indian workers across 24 industries, it had said, will rise an average of 14% in 2006.