News: 'Indian wages to rise fastest in Asia in 2007'

(RTR 16/03/2007) Mumbai - Wages in India are expected to rise by 14.5 per cent in 2007 from 2006, the fastest rate in Asia, as companies pay top dollar to attract and retain talent, a survey showed.

Hewitt Associates, a human resource consulting and outsourcing firm, said in their annual survey that this would be the fourth consecutive year that Indian salaries have notched double-digit growth.

India's economy is expected to grow 9.2 per cent in the 2006/07 fiscal year to March 31 -- its fastest pace in 18 years.

"Due in large to the effects of globalisation, the war for talent is becoming increasingly fierce in India," said Sharad Vishvanath, a business leader at Hewitt in India.

Demand for experienced bankers and traders far outstrips supply as firms from Lehman Brothers and UBS to Goldman Sachs expand their teams in India, where investment banking revenue jumped 23 per cent to $413 million last year, according to market data firm Dealogic.

Hewitt surveyed 600 companies across 21 industries in five different employee groups, and said it expected salaries in the financial sector to grow the fastest this year.

"Salaries in India continue to rise and will most likely reach the same levels as more developed economies in Asia in the near future," Vishvanath said.

Rising productivity

Rising salaries have fueled demand for real estate and consumer durables, and helped push inflation higher.

Annual wholesale price inflation rose to 6.73 per cent in early February, its highest in more than two years, and the government and central bank have taken a number of policy steps to check price pressures.

Among different employee classes, the middle management and the professional sector received the highest salary increases and this trend was likely to continue, Hewitt said.

"Wage differential at the professional levels between India and the rest of the Asian region and other developed nations continue to be huge given the productivity levels," said Sandeep Chaudhary, another business leader at Hewitt told Reuters.

"Admittedly, salaries at the top management level are at very competitive levels. Still, we see a 15-20 per cent headroom from current levels," he said.