Your salary hikes this year may not increase take-home pay
Indian companies are likely to offer an average of 7.7% salary increase this year, the India Salary Increase Survey by consulting firm Aon said. But your salary hike this year may not result in the higher take-home-salary if organisations choose to pay more in the provident fund (PF) contributions due to the new definition of wages proposed by the government, showed a study.The study, that analysed data across 1,200 companies from more than 20 industries noted that while salary increments indicate strong recovery, the Code of Wages could be a gamechanger.Results for Aon's 25th Annual Salary Increase Survey 2021 - India are out now!With data from over 1200 organizations across 38 industries, this is the biggest and most comprehensive salary study in India.Take a look at the results for 2021.#SalaryIncreaseSurvey #SIS pic.twitter.com/KZyQUbPR3n"We expect the increment dynamics for 2021 to play out over a longer period of time given the uncertainty and potential impact of forthcoming changes," Nitin Sethi, partner and Chief Executive Officer of Aon's performance and rewards business in India, said.The proposed definition of wages under the new Labor Codes could lead to additional compensation budgeting in the form of higher provisioning for Benefit plans like gratuity, leave encashment and provident fund, Sethi noted."We expect organisations to review their compensation budgets in the second half of the year once the exact financial impact of the Labor Codes is known. It is also possible that some of the salary increments may not translate into higher cash-in-hand for employees if organisations choose to pay higher provident fund contributions on the new definition of Wages," he said.The survey shows that the highest-paying sectors in 2021 continue to be the ones from last year - Information Technology, Information Technology enabled Services, Life Sciences, E-commerce and Fast-Moving Consumer Goods.The Aon survey showed that 88 per cent of the surveyed companies reported that they intend to increase salaries in 2021, as compared to 75 per cent of companies in 2020.Among sectors in India, e-commerce and venture capital firms will roll out the best pay hikes, followed by high tech, information technology-enabled services and entertainment and gaming.