- US job growth picks speed, weather cuts into hours workedHit by stagflation-type situation, India economic data likely to point to weak growth, high inflationIndian economy: 5.2 per cent growth in Q4 achievable, says C. RangarajanStaff costs for BSE 200 firms rise, salary hikes remain muted
The employees seem to be feeling the heat of deceleration in economic growth and resultant fall in corporate profitability across majority of the sectors. An analysis of the expenses of the top 200 listed companies shows that the growth in employee costs for the first nine months of this fiscal months continues to remain muted.
The aggregate employee costs for the first nine months of fiscal 2014 has seen sharp 18.38% jump compared with 14.66% rise in the previous fiscal, but the rise is still lower than 20%-plus rise seen in fiscal 2010.
Though the aggregate data seems to suggest that employees would have got better compensation than last year, the rise in employee costs has been primarily on account of addition in workforce at select organisations rather than a sharp rise in individual’s salary.
Rajeev Dubey, president group HR, corporate services and the aftermarket sector at Mahindra & Mahindra, says that hiring in his company has been need-based against business critical positions with a long-term impact.
At Mahindra & Mahindra, average increment for executives in the last three years has been about 13% while for workers it has been around 6% to 7%.
A closer look at the data for BSE 200 companies reveals that the 18.38% rise in employee costs has been due to large recruitment drive in banks (SBI) and two information technology firms over last one year. Also exceptional one-time provisions-related to employee benefits at NTPC, SAIL and SBI has led to employee costs rising faster so far this fiscal.
While Sate Bank of India has seen its employee costs so far this fiscal increase by R4,457 crore on year-on-year basis, primarily due to pension and wage hike provisioning, TCS and Tech Mahindra, too, individually reported nearly R3,500- crore jump in employee costs due to recruitment of freshers.
Tech Mahindra has been hiring aggressively in last two quarters taking the head count of those having less than three years’ experience to 33% of the overall workforce.
Similarly, * Tata Consultancy Services has seen gross addition of 41,000 employees (including 23,000 fresh engineering graduates) in the first nine months of 2013-14, taking its head count as end of Q3FY14 to 290,713 employees.
“From an overall human resources point of view, we are maintaining our retention levels pretty high, attrition is at 10.9%. The kind of initiatives that we have taken and the overall business environment are definitely helping us in keeping the retention levels at this stage,” Ajoy Mukherjee, head of global human resources at TCS, said in a quarterly earnings conference call.
If one excludes these three firms from the sample of BSE 200 companies, the aggregate rise in employee costs drops to the four-year low of 13.97%.
No doubt then that the survey conducted by Aon-Hewitt last month painted a grim picture as the consulting firm predicted just 10% growth in salaries next fiscal, down from 10.2% growth projected for the current fiscal.
Dubey believes that while the overall macro indicator indicates a positive trend over the past few months, the business scenario and investment climate will really emerge after the election results.
“Hiring in the coming years will be focused around fresh talent from campuses and building capability measures to get them business ready quickly,” added Dubey.