With inflation remaining at more than 9% in the past nine months, there are enough reasons to worry. For an average Indian, the 10-12% salary hike at the beginning of the financial year has not given the freedom to loosen the purse strings.
“Inflation in India is still very high and unacceptable,” Union finance minister Pranab Mukherjee said on Saturday. In August the inflation peaked at 9.8%.
“The economy is facing trouble from all quarters. Apart from the usual hike in petrol prices, which has now become a routine, there has been an increase in EMIs and consumer index. The stock market has been hit badly and gold prices have also increased to record highs. There has been no end of woes for a person with a fixed salary,” said Yogesh Saigal, head of business development, Talisman Advisors, an executive search firm.
Situation not in favour of employees
Experts say because of the economic environment, it is mainly an employer-driven market, unlike pre-slowdown times. “Even if a person jumps jobs, the average hike has fallen from 40-50% to half of that, a mere 20%,” said Saigal.
The average salary hike in IT, retail, manufacturing and banking, financial service and insurance has not crossed 13-14%. With inflation remaining more than 9% and variable pay also forming a significant part of the compensation, the hikes employees received earlier this year has been nullified.
“I planned to book an apartment after receiving a good hike earlier this year. But now I have been forced to reconsider it as my disposable income, instead of increasing, has dipped,” said Anoop Nair, an employee at an MNC.
Employers cannot change salary
However, companies disagree that variable pay was introduced as a ploy to decrease their overall employee cost. “Companies usually have a fixed compensation structure. Just because the economy is not doing well, we can’t change our salary structure all of a sudden. Variable pay is definitely part of an employee’s salary, but it can’t be decreased or increased overnight,” said senior vice-president of MindTree, Babauji Abraham.
Citing an example, he said in case of a fuel hike, both firms and employees bore its brunt. “If the economy is not doing well, then our operational costs also escalate,” he reasoned.
While all sections of the society are being weighed down by the escalating inflation, the IT sector has some respite, said Raghavan, a chartered accountant.
“The manufacturing sector, such as the garment industry, will be affected because of inflation, which usually has a cascading effect on consumers as increased price of commodities has to be borne by the common man,” he said.
Raghavan added that the IT services companies, which are majorly into export, are less affected with the downfall in the value of rupee in the international market.
