Inflation is hitting the Indian economy and hitting it hard. Recent reports suggest that the rate of inflation has gone up even further and touched 12.63 % for the week ended August 9. This is the highest in the last 13 years. What is amazing is that inflation was only around 4.3 % a year ago! We are speaking of a three fold increase in such a short period.
With this kind of increase, somethings had to be hit- one of them is salary hikes in corporate India for 2009.
A survey by Hewitt associates reports that hikes for 2009 will be around 13.9 %- a full percentage point lower than the 2008 average of 14. 8 %. The survey covered 150 leading corporates and found that inflation was a major factor in determining the extent of salary hikes.
The IT sector- traditionally amongst the most liberal paymaster- would see a scaled down salary hike from 12.5 % last year to 11.3 %. in 2009. Likewise, the hike in the fast growing ITEs sector is said to be slipping from 12.5 % to 11.4 %.
The challenge for India’s corporates would be to make work content, job responsibilties and the overall work environment so exciting that employees do not only look at the pay cheque. Giving, as they often do, paramount importance to the pay cheque. While money is certainly of great importance- more so when your rupee gets you less day by day- it alone does not guarantee an engaged workforce.
The “softer” aspects -such as challenges at work, responsibilities with commensurate authority, learning opportunites and a sense of belonging-supplemented by a competitive pay package- will result in a more committed and stable workforce.
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This is Post No: 266 of the “A Step A Day” series : To provide perspective and provoke thought to facilitate self-development across a wide spectrum of issues- big and small- crucial for executive success.