Pay Hikes to be highest in India in 2007
A study by ECA International says that India is going to see the highest pay hikes in the world this year.
This is what the report says:
The highest salary increases for 2007 are anticipated to be in India, Indonesia and Russia, with companies in all three locations forecasting median increases above 10%. At the other end of the scale, salary increases are forecast to be lowest in Switzerland, Japan and Germany. However, in order to see what is really happening in global salary trends, ‘real wage’ increases –the projected salary increase above inflation – need to be considered.
While Indonesia and Russia are expected to see high pay hikes, it is India which emerge the winner. The report adds:
The highest real wage increases are still expected to occur in India and Indonesia.
The fact that salaries are increasing is something that we in India can see everywhere around us. At one time it was only those who were pouring out from IIT and IIM’s who were getting high salaries but now if you are good, companies are willing to pay. Why, even the traditional textile companies who used to pay their management trainees barely Rs 6000-7000/- as starting salaries now have increased salaries by 25-45%. There is a company which has increased salaries by more than 100% over the last two years. Designers who were not paid well just a few years ago now can pick up a cool Rs 40,000/- per month as a starting salary if they are from a top institute! Why, shop girls in malls are earning Rs 6000/- a month and they are have barely passed their 12th grade. At one time they could not hope to earn more than Rs 3000/- for 9 hours of work.
While starting salaries are going through the roof, so are salaries of top management personnel. There is a shortage of CEO’s and business heads in India as not only are many multi-national companies setting up shop here, there is a plethora of start-ups. Businesses are also expanding into diversified fields. And in those industries where there is a shortage of talent and experienced personnel like in software and retail, salaries are going through the roof!
At one time in India if one has to earn a lot of money the only way was to start a business or if one did not have the mentality to start a business – one could become a doctor and aim for a flourishing practice. But now many companies are giving senior executives the lifestyle they crave for – apartments in posh localities, soft loans to buy homes, health care, club memberships and ofcourse a lot of cash. And its not just IT companies.
Sure, prices are going up too, but as the ECA reports says, real wages are keeping up, inspite of inflation. Here are some ECA figures sourced from a Times of India report:
Country/ Real wage increase in %
United States: 1.2
Wages are still low in India
Ofcourse wages in India are still very low as compared to those in say the United States. A Rs 10,000/- a month for a graduate management trainee may seem peanuts by American standards. It is only $228 after all…but it is still considered a decent salary by many youngsters here as a starting salary. Another advantage that Americans have is that food is a small percentage of their salaries. In India if the bread earner of a family of four is earning Rs 10,000 monthly, most of his salary will go in food and housing and there will be little disposable income.
The wages are actually a levelling off
So these salary hikes that ECA has forcasted are actually just the beginning of a levelling with the rest of the world. Salaries here are low as compared to equivalent salaries even in China. People who work 8-10 hours a day in India at skilled jobs should get enough money to not only feed their families but buy a house and a vehicle. And have some left over. An ideal situation, but we are nearer that dream with each passing year.
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