By Elton Gomes
Employees in the formal sector can now expect a 9 to 12 percent raise in their salaries, with top employees getting even as much as 15% hikes as per media reports. Human Resources (HR) experts say that an improvement in the hiring pace is compelling organisations to retain their top employees, thereby, triggering the increase in salaries.
Here’s what happened
The Indian job market was badly affected due to the effects of demonetisation. However, towards the end of 2017, the job markets showed some positives.
In December 2017, there were pay hikes of about 10-15% for employees that successfully adapted and re-skilled themselves to suit changing work profile requirements.
According to a report by Manpower Groups India Economic Outlook, in 2017, the percentage of employers looking to hire decreased to 22% in the period of January to March. In April to June, that figure further fell to 19%. However, for the period between October to December, the figure rose to 24% and experts hoped that the recovery would continue with mobile manufacturing, fintech companies and startups hiring the most number of employees in 2018.
Rituparna Chakraborty, co-founder of Teamlease Services, a payroll services company told the Financial Times: “Businesses in almost all sectors notably, financial services, retail and e-commerce and media and entertainment are looking to hire talent at an even faster pace.”
The Indian job market has managed to bounce back as GST is being favourably looked at, and demonetisation’s shock value has seemingly reduced.
However, there might be a need to restructure reimbursements for employees as certain categories can fall under the GST, including reimbursements on home rentals, telephone charges beyond a certain limit, medical premiums for extra coverage, health check-ups, transportation, gym use and many more.
MS Mani, a partner, indirect tax, Deloitte Haskins & Sells LLP, said that employers might recover these services through salaries. However, tracking and paying GST might be difficult as an invoice is not produced for these subsidised services.
Why you should care
A beaming job market is good news for everyone, and appraisals motivate employees. Experts believe sectors such as consumer durables, retail, media and advertising are expected to dole out positive appraisals.
Companies are reportedly distinguishing between the top and average performers, and are employing measures like variable pay and better increments, as per a PTI report. About 75% of firms use variable pay, 91% use increments and over 71% use career opportunities as methodologies to differentiate betwen top and average performers.
Cities expected to have highest increments are Bangalore and Delhi, followed by Mumbai, Pune, Chennai, Hyderabad and Kolkata.