At least 38% of companies that gave an increment in the 2020 fiscal have decided to give increments in 2021 as well. “Prior to the lockdown, increment decisions have largely been backward looking with the past year’s performance determining the increment budgets. Covid-19 has brought a big change to the process this year. Organisations are taking into account the likely future performance while deciding increment budgets,” said Anandorup Ghose, partner at Deloitte Touche Tohmatsu India.
Most companies across sectors have not taken a definitive stance on 2021 increments and will decide on the basis of future performance. The companies that have decided to give no increments for the 2021 fiscal include consumer products, manufacturing and services industries.
Promotions without pay hike on the rise
About 350 organisations participated in the latest edition of Deloitte’s survey spread across seven sectors and 25 sub-sectors.
The study found that HR teams implemented several cost-takeout measures, including a reduction in promotions, placing fewer employees in the exceeds-expectations category, applying discretion while making bonus payouts, cutting discretionary spending, revising incentive plans and pay-mix, and altering HR policies, benefits and allowances.
In the 2020 fiscal, only 4 of the 10 surveyed companies in India have given an increment and a third of the companies have decided not to give an increment at all.
The remaining organisations are still undecided. Consequently, for the 2020 fiscal, the average increment at 3.6% is less than half the increment of 8.6% that employees received in 2019. This number is among the lowest in decades.
Ghose said increments were the highest in the life sciences sector and the lowest in the manufacturing and services sector (particularly in the real estate, construction, metals and mining, hospitality, retail, and automobiles industries). “The IT and ITeS sector haven’t been impacted significantly as they are export oriented. Companies, regardless of industry, still gave bonuses provisioned for in the 2020 fiscal, realising that the 2021 financial year is going to be a bad year and they won’t be able to provision for bonuses.”
The average promotional increase has dropped sharply from 7.5% in 2019 to 5.4% in 2020, with a few organisations reporting dry promotions (without increments).
