Salary cuts are getting rolled back, getting back to Normal?
After reducing salaries owing to the pandemic, various companies are now bringing remunerations back to normal. Over the last three weeks, several technology bellwether firms like TCS, Infosys, Wipro, HCL, Tech Mahindra and Mindtree, etc have announced plans to give out salary increments and bonuses.
Also, the interest shown by domestic IT companies in acquiring in-house centres of global firms is also expected to provide fillip to this trend.
Now, several manufacturing and internet companies like Reliance industries, Grofers, Zomato, UpGrad, and Ixigo have begun rolling back the salary cuts effected during the lockdown.
Around 70% of companies in the manufacturing and services space – including in edutech, construction equipment, and automobile and automotive sectors, are looking at restoring salary cuts in the next few months.
According to an ET report published in July this year, New entrants to the Indian market Kia and MG Motor, in fact, have already given variable pay and other incentives, while Mahindra & Mahindra, Hero MotoCorp, Ashok Leyland, TVS Motor, Toyota Kirloskar and Tata Motors are expected to do so in the next month or so.
HDFC Bank Ltd. boosted salaries in April based on performance and also paid bonuses. ICICI Bank Ltd, the second-biggest privately-held lender, gave about 80% of its 100,000 employees a bonus and pay rise from July. Axis Bank is increasing staff salaries between 4% and 12% from October 1, 2020, based on performance.
In government banks, employees’ unions, and the Indian Banks’ Association (IBA) have also reached an agreement for a 15 per cent annual hike in wages in 2020. Performance Linked Incentive (PLI) will also be introduced for public sector bank staff and it will be based on operating or net profit of individual banks concerned.
Yet, a few industry segments like Tourism, hospitality, and aviation have been under-performing due to almost negligible demand amidst the global pandemic.
Industry body PHDCCI expects India’s GDP to contract by 7.9 per cent in the current financial year and grow by 7.7 per cent in 2021-22, assessing that the worst is over and the economy is on the verge of a slow recovery.
Reaching pre-Covid levels, however, may take time as companies are evaluating their costs, implying stricter performance assessment, and redesigned variable pay structure to be in sync with the environment. But data and trends are encouraging.