India’s workers get biggest pay rise

Indian companies are giving their staff the biggest salary increases in the world, according to a survey that is likely to fuel concerns over wage inflation in one of the fastest growing economies.

Indian employees are estimated to have received an average salary increase of 14 per cent this year. The rate is expected to be maintained in with 2008 settlements forecast to average 15 per cent. That compares with an anticipated annual inflation rate of 5.7 per cent this year and 5.4 per cent in 2008.

The survey covered more than 4,000 companies worldwide and was conducted over two months by Towers Perrin, a human resources advisory company.

The survey showed Indian salary rises virtually across the board, from executive to production floor, far outstripping those in China, the other powerhouse of the Asian economy.

Chinese employees are heading for salary increases of 8 per cent this year and 9 per cent in 2008, based on projected annual inflation of 3.6 per cent and 3.5 per cent.

The findings back growing evidence in India that management compensation there is now on a par with and sometimes higher than the global average, excluding the high-profile packages common in the US or UK.

“Typically, you used to get an Indian chief executive for one-third or even one-quarter of the cost of his foreign counterpart,” said Dinesh Mirchandani, India president for Boyden, an executive search firm. “Today, it’s dollar for dollar.”

The rise in Indian salaries comes amid growing concerns about a shortage of qualified staff, partly in information technology, a sector whose growth has made it one of the main engines of the Indian economy.

Microsoft’s Indian operation last month warned that a lack of computer science PhDs could threaten India’s future as the world’s IT services outsourcing hub.

Another Asian country where salaries are rising at double the pace of inflation is Indonesia, the world’s fourth-largest country by population. Executives there can expect salary increases of 11 per cent this year and 12 per cent in 2008, while the inflation rate is seen reaching 6.3 per cent this year and 6 per cent in 2008.

Venezuelan executives are enjoying the highest rise in salaries in nominal terms, slightly above 20 per cent both this year and next, but that is offset by a rate of annual inflation that is anticipated to reach 22.5 per cent next year.

Meanwhile, 64 per cent of employers in the Asia-Pacific region are investing in training as an incentive to retain staff but only 27 per cent invest in salary increases, according to a separate survey published on Wednesday by Mercer, the consultancy.

The survey also found that the most pressing challenge for employers – reported by 92 per cent of the 750 organisations questioned – was attracting and retaining the right talent, especially for activities such as engineering, sales and marketing