Indian salaries likely to rise by 16%

New Delhi: Salaries in India are expected to increase
by 16 per cent in 2009, one of the highest in the Asia-Pacific region.

The proposed salary hike is driven by strong economic growth and
pressure on employers due to soaring inflation, a latest report said.

As per a report by the HongKong based compensation firm
HR Business Solutions (HRBS) pay increases in the Asia-Pacific
region are likely grow even as the economies are expected
to be impacted by the global slowdown.

"The forecast pay increase in India averaging 16 per cent is
one of the highest among all the countries," the report stated.
The HRBS 2009 pay increase forecast is based primarily on four
economic factors — GDP growth, inflation, unemployment, manpower
demand and past pay increase trends.

Elaborating further it said that the Indian economy is reported
to be cooling, but still it is expected to achieve a growth rate
of 7-8 per cent in 2008, which is among the strongest in the
region after China.

"In addition, it has the fourth highest inflation rate of over
12 per cent in 2008 which increases pay rise pressures on employers.
Labor demand is still robust and there is a lack of sufficient
supply of the skills-set required by India's rapidly growing services,
manufacturing, construction and retail industries to boot,"
the HRBS report added.

Economic growth rates in Asia are mostly forecast to be moderately
lower in 2008 relative to 2007, while inflation rate across the
Asia-Pacific region has soared to an all-time high.

"In many of the Asian countries, demand for manpower continues
and in some cases, while general unemployment rate remains high,
the labor market is extremely tight for qualified employees,
for example, India, China and Vietnam," it stated.

Besides, in some developed economies such as Hong Kong, Singapore
and Australia, while the unemployment rate is low, the demand
for people has been strong.

Meanwhile, SriLanka is the other country which is forecast to
see a higher double-digit rise in salaries of about 17 per cent
in 2009. The country's inflation rate of more than 16 per cent
is the next highest in Asia after Vietnam and firms in Sri Lanka
are hiring and facing challenges in recruiting and retaining
skilled human capital.

Most of the neighboring countries of India - Pakistan, China
and Bangladesh are forecast to post around 11 per cent of
expected pay increase.

In 2008, the salary increase in India had averaged at 14.9 per cent.

Other Asia-Pacific countries like China, Vietnam and Indonesia
are forecast to see a rise of 11 per cent, 12.4 per cent and 12.7
per cent, respectively in 2009.

Earlier, in a separate report on Asian compensations, global HR
consultancy Mercer had forecast that India was likely to witness
over 14 per cent increase in salaries annually for the next three
years as the corporates were facing shortage of talent.

The Mercer report had also stated that India, Vietnam and Indonesia
were the only three countries in the Asia-Pacific region which
are likely to see a double-digit increase in salaries until 2011.