Understanding Salary Escalation Trends in Indian Private Sector

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN
INDIAN PRIVATE SECTOR
FOREWORD
The era of LPG (Liberalisation, Privatisation, Globalisation) began in early nineties have
integrated the Indian economy to global markets and so the labour market. The private
sector in India have demonstrated its potential of growth and offered tremendous
opportunities of employment. Compensations become global in nature for similar or
equivalent skill sets, however, the growth levels in compensation differed market to
market. HR organisations have made attempts to understand the linkage and influencing
factors of salary escalation levels as a part of their routine exercise and projected short
term trends for different sectors/ industry. Not much work done to codify and to
understand salary escalation trends over long periods. Reasons and challenges were many.
Influence of market forces to compensation levels and escalation of salary are another
important area of interest for market watchers. The subject of understanding such inter
relationships also assumes a lot of importance and significance for long term projections
of salary and salary linked long term and terminal benefits such as pensions and gratuity.
At this juncture, a minimum level of understanding of behavioural patterns of escalation
in salary and any possible future trends emerging is desirable. The paper Understanding
salary trends in Indian Private sector prepared by the Research department of Institute of
Actuaries of India attempts to meet this objective.
M Karunanidhi
President, Institute of Actuaries of India
A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

MESSAGE
One would agree to the words of Sir Terry Pratchett, Only in our dreams are we free. The
rest of the time we need wages. Moreover, one needs to take into consideration the
upsurge in the cost of need fulfillment and salary levels with time. In the context of
developing India, majority of employed population is associated with private sector
companies. Keeping these aspects in mind, the Research department of the Institute of
Actuaries of India has undertaken a project named Salary trends in Indian Private
Sector. The objective of the project is to understand the underlying trends in salary
escalation rates in private sector in India and shed some light upon possible salary level
movement in future. Besides, an attempt has been made to derive the influence of key
economic indicators on salary escalation rates through analysis of historical data and
creation of salary index benchmark.
I am sure that, the interesting insights brought out in the paper would, definitely, prove
valuable for Benefits Actuaries among others and would lay the foundation for further
research in this space.
Tania Chakrabarti
Chair Person, Advisory Group on Research and Publications

INDEX
Item No.
1
2
3
4
5
6
7
8
9
10
Description
Background
Introduction
Key Findings
Methodology
Application of findings and Results-Limitations
Historical Background
Salary trends-Recent Past
Analysis of Historical data
Future likelihoods
Salary escalations and macro economic variables
Appendix I
Appendix II
Appendix III
Appendix IV
Bibliography
Page No.
4
5
6
7
8
9
11
13
16
18
22
26
28
30
36

1. BACKGROUND
Salary and salary increases are outcomes of number of rational, irrational, subjective and
arbitrary factors. Leaving any irrational and arbitrary factors, it may be broadly put into
some baskets such as;
(a) Regional practises in the economy
(b) Industry/company performances
(c) Compensation policy of the institution
(d) Supply and demand of labour, and
(e) Individuals job performance.
It may be difficult to create a single model for the market by capturing all dynamics which
decide salary increases in time to time. The possibility of a model within a Company/
Sector can only be codified on a broad basis for/over a period. Leaving the company policy
and individual performance factors, other factors together decide performance of the
economy to a large extent.
Understanding salary increases in turn require sensible projections of driving forces of
market and economy which has always been among major challenging and confronting
issues for any political and economic regime. Investigating a historical trend in salary
movements is straightforward and may lead to trends and correlations, however, any
attempt to project a trend needs to be justified with all above relevant factors moving in
tandem. Projecting salary to future based on its links to the market factors may lead to
projecting economy and its deciding parameters and such modelling could be very
complex and beyond the scope of understanding salary projections. This justifies the
situation that not many serious attempts had been made by agencies, institutions and
individuals on the subject in the past. Notwithstanding these difficulties, the salary
projections are integral part of the actuarial practice on the Employee benefits side,
hence some efforts have been made and results are presented in this Paper.

2. INTRODUCTION
People most concerned about future movements of salary include Actuaries which relate
to their role for making financial sense of the future. Reporting and funding of Employee
benefits has been a major service area for consulting actuaries and salary data and
projections of employee specific salary are inputs to the model. There are number of
industrial and service sectors in the economy and numerous companies in each category.
Salary data of any institution in general are confidential in nature and confined to the HR
departments, which prevents any agency to undertake a detailed view on the structural
and incremental changes. This restricts any attempt to understand salary trends in
companies, industries and sectors in a wider canvas. Hence, any attempt to discover
salary trends to be within the broad frame of economy as a whole, considering private or
public sector. The public sector salary growth has a pattern by way of existence of specific
designs in career growth and associated salary scales and defined structure of
compensation and reviews, which is not the case for private sector. This paper attempts
to discuss on salary escalation trends in the private sector during 21st century and its
linkages with some of the key market indicators and possibilities of setting some bench
marks for the future for understanding possible salary movements.
There are quite a good number of economic indicators which make broad sense of the
market which include GDP growth rate, CPI or inflation, WPI and Stock market indices.
Some or all of these indicators might have influenced salary escalation in different times
or all times. The paper also examines and attempts to understand this possibility with
regard to some of the market indicators.

3. KEY FINDINGS
Historical indicators of salary escalation show 12.24%, 12.60% and 12.21% as mean,
median and compounded annual rate respectively for the last 12 years period.
The linear, quadratic and exponential models closely fit to the historical salary
index data.
For a period of 10-15 years, projections under linear, quadratic and exponential
models are close to each other.
For periods exceeding 15 years, the exponential model shows a sharp increase in
comparison to linear and quadratic models.
It is observed that the salary growth rates estimated from the salary indices as
predicted by the exponential model are independent of time, moving at a
compound rate of 12.42% for all future time periods.
Salary growth rates of the Indian private sector have closely conformed to swings in
the macroeconomic conditions of the country. Hence, salary decisions are not
influenced significantly to firm level dynamics like performance, attrition rate etc.
Growth rates of GDP and CPI Inflation are most significant macroeconomic factors
that affect salary growth rates.

4. METHODOLOGY
The following methodology has been used to investigate the values and creating trends:
Analysis of historical data calculation of mean, median, outliers.
Creation of a salary index bench mark, with the base value as 100 in the year 200001.
Fitting trend lines to the salary indices, using linear, quadratic and exponential
functions.
Exploring the relative suitability of each fitted trend function.
Identification of macroeconomic variables those are most influential in affecting
salary budget decisions using principles of economic theory and regression analysis.

5. APPLICATION OF FINDINGS AND RESULTS-LIMITATIONS
Albeit all our judgements and validations on figures collated
from market sources as above, indicators emerged out of the
investigation are very crude in nature and are subject to
further testing and validation before its application to a real
time situation. Indicators are reflecting market as a whole; an
application of results to be a sole discretion of the individual based on the
understanding as to how salary trends of any industry/sector/ category moved in
tandem with the market in the past and significance of any other influencing
factors applicable. Future salary escalations in the market will have a big role in
tuning the projected indexes and to be updated on a real time basis. The Research
department does not recommend any result or values in the report for any
commercial purpose; however, any findings in the report may be used as
background information of the private sector salary market in India.

6. HISTORICAL BACKGROUND
Researching about salary trends and its interrelationships with economic indicators has
been an interesting and desired subject at any time; however, it appears that such
attempts are not been taken place regularly. There are references of occasional
investigations done by Institutions specialised in Human Resources and their findings
regarding correlation of Salary escalation with GDP and/or CPI, however, content,
methodology and basis of any such investigations are either not available or not
authenticated. Reports based on salary and salary increase surveys provide cross sectional
analysis of salary trends across various sectors of the Indian economy as well as across
different managerial hierarchy. Most salary increase surveys explore the factors affecting
attrition, hiring and salary budget optimization techniques that change labour demand and
supply conditions.
10

In an economy which embraces a number of

reforms and ambitious to grow exponentially is
subject to a number of social, structural and
economical and political factors influencing over
periods ,both short and long time. The
privatisation, globalisation and liberalisation
policies have affected Indian pay structures and
packages. In the pre-liberalization era, salaries
were capped but the executives were
compensated by various other perks. With the
advent of the MNCs, maintaining such diverse
benefits
packages
became
complex
and
expensive; most of these reimbursements became
taxable. Compensation was homogenized in
accordance with international norms. Salary became performance linked. The new salary
revision method has favoured middle and junior level executives much more than the
senior executives.
While India strives towards parity between salary rates in the domestic and international
markets in the globalised world, increasing labour costs threaten to erode Indias
advantage in producing goods and services at low cost.
Here arises the natural comparison of Indias trade
fundamentals vis--vis China. Chinas salary increase had
been much lower than that of India in the past decade. In
fact, even after the global economic slump of 2008; Indian
salary growth rates were the highest in the Asia Pacific
region.
Setback to the export sector does not always signal doom
for the economy if high salaries cause a spurt in domestic consumption and investment
demand. However, how much salary growth is translated to aggregate domestic demand
depend upon the consumption propensity of the salaried class, the savings mobilizing
financial infrastructure, the overall investment climate and the import basket of the
economy. Another crucial factor influencing purchasing power of the countrys salaried
class is the rate of inflation. Monthly average wage adjusted for inflation has been
identified by ILO as the decent work indicator. Perhaps the most important driver of
salary growth rates is the economic growth of a
country, as indicated by its GDP growth rates. High
economic growth does not necessarily trickle down
to high salaries, but nevertheless it affects the
firms net profitability which is the necessary
condition to ensure growth in its employees
salaries. It is the importance of these linkages of
salary
growth
rates
with
the
overall
macroeconomic health of the country which
necessitated this project; contrary to the
conventional research on the interrelationship
between salary rates and firm level issues like
promotion, recruitment, attrition etc.
11

7. SALARY TRENDS-RECENT PAST

The report needs to be understood with the data by its sources, definitions and
limitations. Compilation of data and it validation process has been quite challenging,
however, every single indicator picked up from a source of information and/or published
reports are evaluated on a case to case basis and have consolidated for arriving a final
picture. It may be useful to readers to keep a brief summary of information related to
sources, definitions and limitations of data used before proceeding for further reading.
Data sources, definitions and limitations:

Some of the HR organizations published reports on the basis of survey conducted by
them and also projected salary increase in the succeeding year.
Agencies include, Aon, Towers Watson, Mercer, Hay, ECA.
There were few reports showing sector/industry/ category wise trends published
recently, however, no historical data.
Yearly salary growth rates for the private sector as a whole collected from all
above sources from year 2001 onwards.
The salary growth rate for year 2013 has been taken as the forecasted figure by
Aon Hewitt
Yearly salary growth rates for the private sector as a whole were compared
between the reports of various HR organizations, media report and other
publications.
Salary refers to total compensation as understood and taken from data sources and
reports
No agency, governmental or non-governmental published salary data on a regular
basis.
A complete time series data on actual salary growth rates were not available from
just one organization
Aon appeared to be a front runner in doing yearly reporting of salary increases and
creating trends for the next year
Limited information regarding salary increase available from newspaper, media
reports
Not a single research work done and available in both hard/ soft form both in the
public domain and in publications, irrespective of country of reference.
Confidentiality of salary related data appears to be paramount for companies and
collecting even a sample data is nearly impossible.
No methodology referred/ explained in any of the published reports.
12

There are reasons to believe that Government agencies are not engaged in reporting of
salary trends in the Indian private sector on a periodical basis. Some specialised HR
organisations conduct surveys in the market annually and key outcomes, particularly with
regard to salary projections for the current year and performance indicators of different
sectors of economy are published in the media. Historical data shows that the forecasted
salaries for the next year by such agencies tend to be close to the actual growth rate
albeit projections differ marginally from one agency to another, thanks to difference in
methodologies adopted for such investigations. A researcher doing a salary trend related
investigation in India is bound to be satisfied with the limited sources of verification of
available and published figures and its accuracy and regularity. Information on salary
increases for the Private sector is collected from year 2001 to 2012 and forms the basic
historical data for any investigation and is summarised in the graph below:
Private sector salary growth rate

13.7%
12.8%
14.1%
14.4%
15.1%
13.3%
12.6%
11.5%
11.1%
12.0%
9.7%
6.6%
2001-'02 2002-'03 2003-'04 2004-'05 2005-'06 2006-'07 2007-'08 2008-'09 2009-'10 2010-'11 2011-'12 2012-'13
Year
Graph 1
13

8. ANALYSIS OF HISTORICAL DATA

History never repeats by all its characteristics, it only leaves
foot prints to future for a reasonable period of time. The
question of how long to the future depends on the event
and impact /severity and frequency of incidents. Economic
indicators also often follow this theory and principles of
history and applicable to salary trends as well. It would be
worth to understand what historical figures have indicated to
carry something to future trends from the above figures of
salary increments. Takeaways from the past may only help us to set bench marks for a
reasonable short period of time and there could be a number of unpredictable factors
which finalise the shape of the curve along with factors carried from the past.
Order
1
2
3
4
5
6
7
8
9
10
11
12
Year
Salary
Quartile
2009-10 6.6%
2002-03 9.7%
2010-11 11.1% Q1
2003-04 11.5%
2012-13 12.0%
2011-12 12.6% Q2= Median
2001-02 12.8%
2008-09 13.3%
2004-05 13.7% Q3
2005-06 14.1%
2006-07 14.4%
2007-08 15.1%
Table 1
Looking the above table, the historical values during the past 12 years moved with a
median value of 12.6% and have nter-quartile range of 2.6%. The outliers in the values are
to be those observations less than Q1- 1.5* 2.6% or greater than Q3+ 1.5* 2.6% which
circles on one value recorded on the year 2008-09 only and is obvious with valid reasons
such as economic down turn during the period. The median make a sense of the historical
trend and could be a bench mark on projecting near future values. When year wise salary
rates are converted into salary index starting from a base value of 100 in the year 200001, it leads to take a broad view that the salary increased 4 times over a period of 12
years which is equivalently to a compounded annual rate of 12.21%. The average value is
12.24% and summarised below:
Measure
Value (historical)
Mean
12.24%
Median
12.60%
Compounded annual rate
12.21%
Table 2
14

Actual salary increases after converting to salary index format with starting value 100
from year 2000-01 appear as a best fit for linear, quadratic and exponential models. The
table 3 and graph 2 below reveals this feature:
Year
Salary
increase
Index
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
12.8%
9.7%
11.5%
13.7%
14.1%
14.4%
15.1%
13.3%
6.6%
11.1%
12.6%
12.0%
112.80
123.74
137.91
156.80
178.91
204.68
235.58
266.92
284.53
316.11
355.94
398.66
Table 3
The salary trend lines reflecting exponential and two degree polynomial models appear to
be a close fit to the historical index as:
Salary Index- Historical

398.66
355.94
316.11
266.92
284.53
235.58
204.68
100.00
112.80
123.74
137.91
156.80
178.91
2000-'01 2001-'02 2002-'03 2003-'04 2004-'05 2005-'06 2006-'07 2007-'08 2008-'09 2009-'10 2010-'11 2011-'12 2012-'13
Salary Index
Expon. (Salary Index)
Poly. (Salary Index)
Graph 2
Barring two years in 2007-08 and 2008-09, trend lines almost coincides with the actual
salary index values and the salary index values estimated for exponential and quadratic
models are worth noting.
15

Year
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
Actual Exponential Quadratic

112.80
123.74
137.91
156.80
178.91
204.68
235.58
266.92
284.53
316.11
355.94
398.66
112.07
125.98
141.63
159.22
179.00
201.23
226.22
254.32
285.90
321.41
361.33
406.21
110.71
124.60
140.89
159.58
180.67
204.16
230.06
258.35
289.04
322.14
357.63
395.53
Table 4
For the historical data, the exponential and quadratic models fit closely and these models
may be tested for salary index projections.

16
9. FUTURE LIKELIHOODS
It may be interesting to see as to how the future projections of the
above models making sense to future projections, starting from
time 1 as year 2000-01. Graphs projected with linear, quadratic
and exponential models for next 50 years with year 1 as 2013-14
as:
Salary Index Projection

S
a
l
a
r
y
40000
35000
30000
25000
20000
15000
10000
I
n
d
e
x
5000
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49
Time
Linear
Quadratic
Exponential
Graph 3
The values of projected salary index along with model summary, ANOVA and table of
coefficients are available in Appendix-I for reference.
Models have been fitted by using SPSS using historical values and have parameters as per
the summary table here under:
Type
Linear
Model
Salary Index= 48.13+ (24.69*Time)
Salary Index=
Quadratic
90.14+(7.89*Time)+(1.2*Time^2)
Exponential Salary Index= 88.67*Exp(0.12*Time)
Table 5
The exponential values outperform very aggressively compared to the linear and quadratic
model values as and when the time progresses and maintains a uniform year to year rate
of 12.42%. The compounded annual salary growth rate and median values of historical data
being 12.21% and 12.6% respectively, the exponential model makes more sense to the
future projected salary index values. The parameters above are likely to be modified year
to year for the exponential model as and when actual salary data replaces the projected
figures. The clustering of average compounded rate on a year to year basis is also in the
17

range of 12.21% to 12.6% and likely to move in the same pattern on a short and long term
basis.
The economic slowdown and recovery is a matter of a number of global and domestic
factors and future levels of salary following a recession/ shock on the economy always
carries such indicators of recent past. The salary expectations for the near future years
seem to be carrying ghosts of the current and recent pasts, as is evident from graph 1 and
also decided by economic indicators which always set the ground for compensation levels.
This part is analysed in the Appendix-II
For applying the salary index trends to specific industries/ sectors/
regions, one needs to keep in mind as to how the historical salary
levels of those specific industries/ sectors/ regions moved with
the private sector as a whole in the past. The subjective
judgement to calibrate the projected salary index for different
situations is to be based on the level of understanding of this
relationship.
Observations and suggestions from readers:

Any observations/ feedbacks and suggestions may please be communicated to
vinodkumar@actuariesindia.org
18
10.

SALARY ESCALATIONS AND MACRO ECONOMIC VARIABLES
Macroeconomic variables, in isolation and in groups have large say in salary levels. The
question is, whether the relationship is to be read as a single or multi variable model for
interpreting salary levels.
As mentioned earlier, salary rates are the outcomes of various firm, industry and economy
level phenomena. While data unavailability constrains analysis of industrial policies and
performance, labour market movements and employee performance for the private
sector, an attempt is made to understand the salary determination issue at a broad
nationwide level.
Following the global economic meltdown in Oct 2008, the Indian economy slowed down,
with sharp falls in profit levels of those sectors, particularly which are highly dependent
on the international market. The corresponding fall in the salary budget for 2009 once
again bears the fact that salary rates indeed depend upon macroeconomic conditions;
internal firm level dynamics are not the sole determinants of salary in the Indian
economy.
Salary growth rates are linked to various macroeconomic variables, often in complex ways.
Our objective is to disentangle the effects of each of these economic variables on salary
growth rate to have a clear understanding of how Indian private sector salary actually
grows. Firstly, those economic indicators have to be identified which can reasonably
affect the macroeconomic environment of the country and in turn have a logical
relationship with salary budget decisions. Here lies the trap of confusing correlation with
causation; this calls for intuitive understanding of the linkages between economic
processes. Some screening is required as many such economic variables are difficult to
model or their historical data are unavailable.
The crucial determinants of the macroeconomic conditions are GDP growth rate, rate of
inflation, private sector performance as indicated by stock market movements, index of
industrial productivity, exchange rates and the prevalent monetary policies which affect
interest rates, liquidity and investment potential of a country.
These factors are closely interrelated with one another; they may or may not be related
with salary growth rates of the private sector. For example, variations in the bank rate,
repo rate, cash reserve ratio and open market operations by the central bank can be
policy measures taken to control inflation. How frequently they are adjusted as per
inflationary trends depend upon the significance of excess liquidity in affecting inflation
and the state of the banking sector. Hike in interest rates following hike in bank rate and
repo rate make investment expensive, thereby reducing domestic investment and in turn
GDP. Economic data shows weak negative correlation between Gross Fixed Capital
Formation (GFCF) growth rate (a proxy for investment in fixed capital of the economy),
repo rate and bank rate. Post economic crisis of 2008, GFCF fell and rose again; just like
GDP and salary growth rates. So for the sake of simplifying the analysis, it may be assumed
that salary growth rates would be affected by the money market via GDP and inflationary
changes, ignoring the above liquidity determinants.
Rise in the index of industrial productivity (IIP) will cause GDP to rise, depending upon the
contribution of the manufacturing sector to GDP. Year 2008 onwards, the yearly average
of the index of industrial productivity grew or remained stagnant; while GDP and salary
growth rates fluctuated. No apparent relation between IIP and salary rates has been
19

observed. As such, the index of industrial productivity may be dropped from the list of
important determinants of salary growth rate.
The sector that mostly influences GDP growth rates is the service sector. The share of
services in GDP at factor cost (current prices) was 55.2% in 2009-10; if construction is
included the share is 63.4%. The advance estimates for 2012-13 pegs the share of the
service sector to GDP at 56.5%. Export of services has been growing at a faster rate than
the export of manufactured goods. In 2009-10, NSSO estimated that out of 1000 Indians,
679 people are employed by the agricultural sector, 80 in the industrial sector and 241 in
the service sector (including construction). The most prominent industry in the service
sector has been the IT and ITeS industry, which has not only captured a sizeable portion of
the overseas market but has also provided 2.8 million people with direct employment and
8.9 million with indirect employment in 2011. The worldwide recession has decelerated
the export growth of this industry and in turn its total revenue. Correspondingly, median
salary of the IT sector remained stagnant at 10% from 2011 to 2012 while for the IteS
sector the drop was from 15.5% to 12%. Once again, the vulnerability of Indian salaries in
the globalised world is apparent.
While it is practically unfeasible to study economic conditions of all major trading partners
of India for understanding domestic salary trends; we choose exchange rate as one
important reflector of global economic movements. However, exchange rates do not
provide conclusive evidence of the state of the world economy; while US was reeling
under the subprime crisis and investment bank failures in 2008, the exchange rate of
Indian rupee vis-a-vis the US Dollar shot up steeply. Again we can find indirect linkages of
exchange rates with salary rates. For example, high exchange rates increase our import
burden (India is a net importer of goods and services with a current account deficit, petro
products being the most vital import item); which often cause increase in imported raw
material inputs. Governments subsidy burden on petro products is occasionally passed
onto the citizens, causing almost immediate cost push inflation all over the country. Rising
cost of living can be an important factor in deciding an employees compensation. While a
higher exchange rate of the Indian rupee against the US Dollar suggests that exported
Indian products are getting cheaper in the international market compared to the exports
of the other countries; how well the export sector performs will also depend upon the
demand levels in the international market. For example, although the exchange rate grew
by 14.24% in 2008, the Indian export sector witnessed sharp downturn during this time
following the recession in the OECD countries. Thus, the conclusion that exchange rate
affects the profitability of the export-import sector, and in turn its salary decisions, is
ambiguous. For the other sectors of the economy, it is logical to assume that salary
decisions would never be based upon the exchange rate changes of the national currency.
Rather, alterations in the economic conditions due to exchange rate swings may be
reflected in salary budget changes by some proxy parameter, most likely the GDP growth
rate. There is no visible similarity in the path of exchange rate growth rate movement and
GDP growth rate movement; particularly 2001 onwards which marked the beginning of the
period of salary data availability. So in spite of exchange rate being a significant indicator
of the macroeconomic conditions in a country, assuming that it is not an important
determinant of salary rates of the overall private sector of the Indian economy; we drop it
from further investigation.
Rise in the stock market indices does not necessarily indicate economic development since
stock market prices are subjected to speculation, contagion effects of nearby countries
and continuous changes in the international financial markets. Yet stock market indices of
various corporations are an indicator of their financial robustness. While there seems to be

20
no apparent relation between GDP growth rates and the high volatility of Indian stock
markets, we incorporate stock market indices as a proxy for the profitability of the private
sector, which in turn should be a significant determinant of the compensation policy of
the firms.
While each of the above factors is weakly correlated with salary growth rates, all of them
do not directly cause its changes. The most important determinants of salary have now
been narrowed down to GDP growth rate, inflation and stock market index. As we start
screening available data on these macroeconomic indicators, it was observed that there
exist numerous variations of the same measure. With the primary objective of this paper
in view, i.e. understanding salary escalation rates, we choose the best variant of the
macroeconomic indicators.
Given below are the year-to-year percentage growth rates of salary and some
macroeconomic variables. The method and source of data selection for calculation and
verification of macroeconomic variables below are explained in Appendix-III
Year
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
Salary GDP
12.8%
9.7%
11.5%
13.7%
14.1%
14.4%
15.1%
13.3%
6.6%
11.1%
12.6%
CPI
WPI
5.52 3.67 3.60

3.99 4.47 3.41
8.06 3.71 5.46
6.97 3.89 6.48
9.48 3.97 4.47
9.57 6.27 6.59
9.32 6.37 4.74
6.72 8.35 8.05
8.39 10.88 3.80
8.39 11.99 9.56
6.48 8.86 8.94
CNX500
Index
-26.70
4.81
44.42
50.37
45.19
29.51
147.29
-59.39
8.41
28.69
3.44
Table 6
For the purpose of understanding, the direction of movement of salary growth rates vis-vis movements of macroeconomic indicators, mainly GDP Growth, CPI,WPI and CNX500
Index over years are summarised below :Year
Salary
GDP
CPI
WPI
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
Fall
Rise
Rise
Rise
Rise
Rise
Fall
Sharp Fall
Rise
Rise
Fall
Sharp Rise
Fall
Rise
Rise
Slight Fall
Fall
Rise
Unchanged
Fall
Rise
Fall
Slight Rise
Slight Rise
Rise
Slight Rise
Rise
Rise
Rise
Fall
Fall
Rise
Rise
Fall
Rise
Fall
Rise
Fall
Rise
Fall
CNX500
Index
Rise
Rise
Rise
Fall
Fall
Sharp Rise
Sharp Fall
Rise
Rise
Fall
Table 7
21

WPI takes into account the prices of all primary articles, fuel and manufactured goods. It
is the broadest measure of inflation, which shed light on cost of raw materials and in turn
on profit levels of firms. Yet, for this project CPI has been chosen as an indicator of
inflationary conditions in the economy since it is a better reflector of cost of living
changes than WPI. The salaried class is more affected by the food and non-food articles
covered under CPI than the prices of the vast array of goods prices which the WPI covers.
Hence, the study of understanding correlation between salary escalation and macro
economic variables is narrowed down to the remaining variables viz., GDP growth, CPI and
CNX500 Index and are explored in Appendix IV
22

APPENDIX-I
Salary Index
Time
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
Linear
72.82
97.51
122.20
146.89
171.58
196.28
220.97
245.66
270.35
295.04
319.74
344.43
369.12
393.81
418.50
443.20
467.89
492.58
517.27
541.96
566.66
591.35
616.04
640.73
665.42
690.11
714.81
739.50
764.19
788.88
813.57
838.27
862.96
887.65
912.34
937.03
961.73
986.42
Quadratic Exponential
99.22
99.69
110.71
112.07
124.60
125.98
140.89
141.63
159.58
159.22
180.67
179.00
204.16
201.23
230.06
226.22
258.35
254.32
289.04
285.90
322.14
321.41
357.63
361.33
395.53
406.21
435.82
456.66
478.52
513.37
523.62
577.13
571.12
648.81
621.02
729.39
673.32
819.98
728.02
921.82
785.12
1,036.31
844.62
1,165.02
906.52
1,309.72
970.82
1,472.38
1,037.53
1,655.25
1,106.63
1,860.83
1,178.14
2,091.94
1,252.04
2,351.76
1,328.35
2,643.84
1,407.06
2,972.20
1,488.16
3,341.35
1,571.67
3,756.34
1,657.58
4,222.87
1,745.89
4,747.34
1,836.60
5,336.96
1,929.71
5,999.80
2,025.23
6,744.96
2,123.14
7,582.68
23

39
40
41
42
43
44
45
46
47
48
49
50
Table 8
1,011.11
1,035.80
1,060.49
1,085.18
1,109.88
1,134.57
1,159.26
1,183.95
1,208.64
1,233.34
1,258.03
1,282.72
2,223.45
2,326.17
2,431.28
2,538.80
2,648.71
2,761.03
2,875.75
2,992.86
3,112.38
3,234.30
3,358.62
3,485.34
8,524.43
9,583.16
10,773.37
12,111.41
13,615.63
15,306.67
17,207.73
19,344.91
21,747.52
24,448.52
27,485.00
30,898.59
SUMMARY OF MODELS:
Linear:
Model Summary
R
.986
R Square Adjusted R Square Std. Error of the Estimate

.973
.971
16.742
ANOVA
Sum of Squares
df
Mean Square
Regression
110963.443
110963.443
Residual
Total
3083.359
114046.801
11
12
280.305
Sig.
395.866 .000
Coefficients
Unstandardized Coefficients Standardized Coefficients
Case Sequence
(Constant)
B
24.692
48.125
Std. Error
1.241
9.850
Beta
.986
Sig.
19.896 .000
4.886 .000

24
Quadratic:
Model Summary
R
Std. Error of
the Estimate
4.459
R Square Adjusted R Square
.999
.998
.998
ANOVA
Regression
Residual
Total
Sum of Squares
df
Mean Square
113847.956
198.846
114046.801
2
10
12
56923.978
19.885
Sig.
2862.719 .000
Coefficients
Case Sequence
Case Sequence **
2
(Constant)
Unstandardized
Coefficients
B
Std. Error
7.887
1.434
1.200
.100
90.137
4.365
Standardized
Coefficients
Beta
.315
.690
Sig.
5.501
.000
12.044 .000
20.652 .000
Exponential:
Model Summary
R
.999
R Square Adjusted R Square

.997
.997
Std. Error of
the Estimate
.024
ANOVA
Regression
Residual
Total
Sum of Squares
df
Mean Square
2.494
.006
2.501
1
11
12
2.494
.001
Sig.
4243.443 .000
25

Coefficients
Unstandardized Coefficients Standardized Coefficients
Case Sequence
(Constant)
B
.117
88.672
Std. Error
.002
1.265
Beta
.999
Sig.
65.142 .000
70.104 .000

26
APPENDIX-II
ANALYSIS OF MACROECONOMIC FACTORS AND THEIR RELATION WITH SALARY
To study the effect of GDP, CPI and CNX500 Index fluctuations on salary growth rates, the
trends of salary vis-a-vis these factors needs to be considered, one at a time.
i)
Salary and GDP
Salary & GDP rates (Percentage)

13.70
12.80
8.06
2000-01
14.40
15.10
13.30
11.45
9.70
5.52
14.10
9.48
9.57
11.10
9.32
6.97
6.72
8.39
6.60
12.60
8.39
6.48
3.99
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
Year
Salary
GDP
Graph 5
Salary rate movement broadly resembles movements in GDP growth rates. At times, the
effect of GDP growth rate swings on salary is not realised immediately, but in the next
year.
ii)
Salary and CPI
Salary and CPI (Percentage)

16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Salary
CPI
Graph 6

27
CPI Inflation enhances the cost of living; this should be reflected in higher compensation
to employees. However Indian data on salary growth rate and CPI inflation rate shows
opposite trends, the two curves cross twice.
iii)
Salary and CNX500 Index
200.00
Salary & CNX 500 Index (percentage)
150.00
100.00
50.00
0.00
0
10
12
-50.00
-100.00
Salary
CNX500 Index
Graph 7
The CNX500 Index exhibits wide volatility in comparison with the salary growth rate curve.
However, the possibility of its effect on salary growth rate cannot be ignored all together;
since it can explain salary increases at times when all other economic variables had
become unfavourable to positive salary growth movements.

28
APPENDIX-III
DATA SELECTION
Gross Domestic Product: GDP at Factor Cost (in Rs. Billion) at 2004-05 prices
Source: RBI Database.
The sum of Net Value Added in various economic activities is known as GDP
at factor cost.
GDP at factor cost plus indirect taxes minus subsidies = GDP at Market
Price.
Hence, GDP at factor cost indicates the true value of the net output
produced by the private sector; within the geographical boundaries of the
country. GDP at market prices includes the governments income in addition
to the net value of the private sectors output. Since our objective is to
study how the salary rates of the private sector respond to macroeconomic
changes; GDP at factor cost is a better measure than GDP at market prices.
Value of goods and services = Price* Quantity. Changes in either price or
quantity can cause the value of output to change. To examine the change in
the quantity of output produced, prices must be held fixed. This is the
justification behind using GDP at constant prices instead of GDP at market
prices. In this data, all outputs of goods and services over the years are
valued at 2004-05 prices.
The GDP at factor cost, valued at constant prices gives the real change in
the output of goods and services produced in the economy; the measure is
completely free of inflationary impacts on the output value.
The rate of growth of GDP shows the growth in GDP values in percentage;
from one time period to the immediately next time period.
GDP values and rates of growth cross checked with MOSPI data.
Data checks: GDP at Market Price/ GDP at Factor Cost = GDP Deflator =
Inflation rate from 2004-05 prices.
- GDP Deflator for 2004-05 = 1.
- GDP Deflator = WPI /100.(approx.)
Consumer Price Index (CPI)
The best measure of inflation which captures the prices by the salaried
class is Consumer Price Index (CPI) for the Urban Non Manual Employees.
CPI for Urban Non Manual Employees (UNME) is available till Dec 2010. 2011
onwards, CPI calculation is based on rural-urban classification instead of
occupational category like Agricultural workers (AW), Industrial workers
(IW) and Urban Non Manual Employees.
No linking factor could be found between these two measurement criteria.
The base year calculations are also different for the two series.
The only continuous CPI series available is that of the Industrial Workers.
Data collection centres for the UNME and IW series are almost the same,
weightage given to the food and non-food commodities are slightly
different.
Hence as a measure of inflation in the urban areas, the IW series of CPI has
been chosen.

29
The data available from International Monetary Fund, World Economic

Outlook Database, October 2012 has been cross checked with the data from
CSO Database. 2011 onwards CPI figures are not actual, but that estimated
by IMF staff.
Inflation rate of CPI checked with media reports.
Wholesale Price Index (WPI)
The WPI is the broadest index reflecting changes in overall price levels of
the economy. Price of industrial outputs, which determine the profitability
of companies are captured by the WPI.
The nodal agency for collecting WPI related data is the Office to the
Economic Advisor to the Govt of India. (Ministry of Commerce and
Industries). The data used in this project has been collected from the
database of the aforementioned agency
The raw data was available in two series; one with 1993-94 as the base year
and another with 2004-05 as the base year. The 1993-94 base year indices
were converted to 2004-05 prices by the linking factor prescribed by the
data source agency. A consolidated WPI series calculated with 2004-05 as
the base year price.
Inflation rate calculated in percentage from the consolidated WPI series.
S&P CNX 500 Index
S&P CNX 500 Equity Index reflects the market as closely as possible. It is
the broadest stock market indicator.
The S&P CNX 500 represents 95.53% of total free float market capitalization
of the universe of the stocks traded on NSE and 94.76% of the total turnover
on the NSE as on September 28, 2012.
The daily index is calculated by taking average of open, close, high
and low values of the index observed over a trading day.
The daily averages are averaged from the first trading day of April to the
last trading day of March to obtain the financial year average.

30
APPENDIX - IV
REGRESSION
. The trend lines indicating growth rates of salary vis-a-vis growth rates of macroeconomic
indicators indicate some relationship between salary and economic factors. To add clarity
to the analysis, this relationship requires quantification. However, direct regression of
salary on these macroeconomic variables does not yield reasonable results. Regression
with such variables is difficult as there are possibilities of co linearity and spurious
correlations; which can vitiate the understanding of salary growth rates. The regression
results are reasonable (co linearity statistics, autocorrelation, homoscedasticity of error
variance, goodness of fit statistics within limits) when CAGR Salary is regressed on CAGRs
(Compounded Annual Growth Rates) of the macroeconomic variables.
Method 1: Regression of CAGR Salary on CAGR of macroeconomic variables
The ordinary least square regression results are summarized below:CAGR
Salary
Constant
Coefficient
Significance
Coefficient
Significance
Coefficient
Significance
Five Year
Four Year
Three
Year
7.439
.226
4.145
.188
4.795
.130
CAGR
GDP
0.939
.207
1.329
.012
1.509
.014
CAGR CPI
Inflation
- 0.357
.073
- 0.35
.014
- 0.598
.027
CAGR
CNX500
R
Square
0.761
0.911
-0.021
.334
0.911
CAGR GDP and CAGR CPI are the chief explanatory variables for CAGR Salary. However a
rise in the adjusted R squared value on inclusion of CAGR CNX500 for the Three Year CAGR
Salary shows that it can be used as an explanatory variable; but it is still not very
significant.
The above regression models suggest that CAGR Salary is positively related with CAGR GDP
and negatively related with CAGR CPI. These are the most significant factors that explain
movements in CAGR Salary.
Given below are the CAGR Salary rates predicted by the above regression models using
corresponding durations CAGR GDP, CPI and CNX500 values:Year
2004
2005
2006
2007
2008
2009
GDP CAGR
3 yr 4 yr 5 yr
6.33 6.12 5.76
8.16 7.10 6.79
8.67 8.51 7.59
9.46 8.83 8.67
8.53 8.77 8.41
8.14 8.50 8.69
CPI Inflation CAGR

3 yr
4 yr
5 yr
4.02
3.94 3.93
3.86
4.01 3.94
4.70
4.46 4.46
5.53
5.12 4.84
6.99
6.23 5.76
8.52
7.95 7.14
CNX500 CAGR
3 yr
31.54
46.64
41.40
66.91
9.15
2.87
PREDICTED CAGR SALARY

3 yr
4 yr
5 yr
10.72
10.91
11.44
12.83
12.19
12.40
13.22
13.90
12.98
13.33
14.09
13.86
12.72
13.62
13.27
11.68
12.66
13.05
2010
7.83
8.20
8.48
10.40
9.38
8.75
-17.26
10.89
11.77
12.27
2011
7.75
7.49
7.86
10.57
10.01
9.27
13.01
10.07
10.60
11.50
31

The predicted CAGR Salary values for three, four and five years compounded duration can
be compared with the actual CAGR Salary values in the table below:-
Year
Predicted CAGR Salary

3 yr
4 yr
5 yr
Actual CAGR Salary

3 yr
4 yr
5 yr
2004-'05
10.72
10.91
11.44
11.60
2005-'06
12.83
12.19
12.40
13.08
12.22
2006-'07
13.22
13.90
12.98
14.07
13.41
12.66
2007-'08
13.33
14.09
13.86
14.53
14.32
13.74
2008-'09
12.72
13.62
13.27
14.26
14.22
14.12
2009-'10
11.68
12.66
13.05
11.61
12.30
12.66
2010-'11
10.89
11.77
12.27
10.30
11.48
12.06
2011-'12
10.07
10.60
11.50
10.07
10.87
11.70
The Chi Square test employed to test for closeness of predicted CAGR Salary values to
actual CAGR Salary values yields the following results:-
Chi Square statistic

Degrees of
freedom
Level of
significance
Three year CAGR

Salary
0.46
Four year CAGR

Salary
0.22
Five year CAGR

Salary
0.29
0.977
0.994
0.963
The Chi Square statistic is calculated as {(Actual CAGR Salary) - (Predicted CAGR
Salary)} / (Predicted CAGR Salary)
Degrees of freedom = No. of observations No. of parameters
The high levels of significance show that all the models have closely conformed to the
actual values. The Four year CAGR Salary model has fitted the historical data best.
Derived values of year-to-year percentage salary growth rates from the Salary CAGRs
predicted by regression models are not close to actual yearly salary growth rates. This
limits the scope of regression to some extent.
A possible way of utilizing these regression models is to apply CAGR GDP and CAGR CPI
forecasted by various agencies for the immediate future time period and obtaining the
corresponding CAGR Salary rates. The forecasted CAGR Salary rates can give an indication
of yearly percentage salary growth rate, even though it cannot precisely predict it.
Method 2: Regression of CAGR Salary on CAGR GDP, Time Cube
The previous regression analysis shows GDP CAGR as a significant variable influencing
CAGR Salary. GDP growth rates by various agencies are available for the immediate future.
Cubic functions of time closely fit the historical CAGR GDP data. Movements in CAGR
Salary can be attributed to movements in CAGR GDP once the influence of time is

32
separated from CAGR GDP fluctuations. Regression of CAGR Salary on CAGR GDP and Time
Cube yields the following results:CAGR Salary
Five Year
Four Year
Three Year
Constant CAGR GDP Time Cube R Square

Coefficient
Significance
Coefficient
Significance
Coefficient
Significance
7.035
.298
3.483
.328
3.450
.201
.831
.304
1.258
.028
1.289
.006
-.002
.115
-.002
.031
-.003
.005
.685
.869
.897
Here, year 2001 corresponds to time 1. The positive relation between CAGR GDP and CAGR
Salary holds for three, four and five years compounded duration.
Using the regression model given above, the following CAGR Salary values can be
predicted from the corresponding CAGR GDP and time cube figures:
GDP CAGR
Year
3 yr
4 yr

5 yr
Time Cube
3 yr
4 yr
5 yr
2004-'05
6.33
6.12
5.76
64.00
11.43
11.07
11.72
2005-'06
8.16
7.10
6.79
125.00
13.63
12.19
12.48
2006-'07
8.67
8.51
7.59
216.00
14.04
13.80
13.00
2007-'08
9.46
8.83
8.67
343.00
14.71
13.96
13.70
2008-'09
8.53
8.77
8.41
512.00
13.06
13.58
13.21
2009-'10
8.14
8.50
8.69
729.00
11.97
12.84
13.10
2010-'11
7.83
8.20
8.48
1,000.00
10.84
11.98
12.48
2011-'12
7.75
7.49
7.86
1,331.00
9.84
10.48
11.44
The predicted values are compared with the actual CAGR Salary values to test for
goodness of fit:
Actual CAGR Salary
Year
3 yr
4 yr
5 yr
3 yr
4 yr
5 yr
2004-'05
11.43
11.07
11.72
11.60
2005-'06
13.63
12.19
12.48
13.08 12.22
2006-'07
14.04
13.80
13.00
14.07 13.41 12.66
2007-'08
14.71
13.96
13.70
14.53 14.32 13.74
2008-'09
13.06
13.58
13.21
14.26 14.22 14.12
2009-'10
11.97
12.84
13.10
11.61 12.30 12.66
2010-'11
10.84
11.98
12.48
10.30 11.48 12.06
2011-'12
9.84
10.48
11.44
10.07 10.87 11.70
33


Degrees of
freedom
Level of
significance
Three year CAGR

Salary
0.180152
Four year CAGR

Salary
0.108447
Five year CAGR

Salary
0.10736
0.999
0.9985
0.991
The CAGR Salary values predicted by the above models are very close to the actual CAGR
Salary values. With the availability of GDP forecasts from credible sources, CAGR Salary
can be predicted by these models.
Method 3: Regression of CAGR Salary on CAGR GDP, Sine Time
If the issue of forecasting is considered with CAGR GDP as the only explanatory economic
variable, the continuously rising CAGR GDP values predicted by a cubic trend curve fitted
to the historical data result in ever-increasing CAGR Salary forecasts. The problem can be
tackled by incorporating another explanatory variable that exhibits cylicity. Usage of sine
time as a second explanatory variable of CAGR Salary, arrests the problem of continuously
rising CAGR Salary forecasts to some extent.
As regression of CAGR Salary on CAGR GDP and Sin Time does not produce statistically
sound results for three and four years compounded amount duration; the results of
regressing Five Year CAGR Salary on Five Year CAGR GDP and Sin Time can only be
employed for forecasting purposes. The results of this regression are mentioned below:
Constant 5 yr CAGR GDP Sine Time R Square

Coefficient
16.958
Five Year CAGR Salary

Significance
.015
-.506
.305
1.336
.926
.012
Five Year CAGR Salary values predicted from the above regression model can be
compared with the actual Five year CAGR Salary values from the table below:Year
2006-'07
2007-'08
2008-'09
2009-'10
2010-'11
2011-'12
Predicted Actual
Value
Value
12.75
12.66
13.45
13.74
14.03
14.12
13.11
12.66
11.95
12.06
11.65
11.70
34

Degrees of freedom
Level of significance
0.02
3.00
0.99899
The high level of significance indicated by the Chi Square statistic shows close fit of the
predicted values with the actual values.
A Comparison of the Regression Methods
Year
2006-'07
2007-'08
2008-'09
2009-'10
2010-'11
2011-'12
Sig Level of Chi
Square
Statistic
Actual Five Year Predicted Five Year CAGR Salary

CAGR Salary
Method 1 Method 2 Method 3
12.66
12.98
13.00
12.75
13.74
13.86
13.70
13.45
14.12
13.27
13.21
14.03
12.66
13.05
13.10
13.11
12.06
12.27
12.48
11.95
11.70
11.50
11.44
11.65
0.963
0.991
0.999
The three methods are applicable for estimation of Five year CAGR Salary values; method
3 is unsuitable for estimation of three and four year CAGR Salary.
Usage of the regression models cited above for forecasting purpose would essentially
depend upon the availability of credible CAGR CPI forecasts (for method 1) and CAGR GDP
forecasts (for methods 1, 2 and 3).
Since the small size of the actual Five year CAGR Salary data prevents drawing of strong
conclusions regarding the best method; the three methods together can give an idea
about the range of CAGR Salary forecast. Once again, range does not imply that the actual
CAGR Salary would lie strictly between the upper and lower limits as predicted by the
regression models. For example, the values of Five year CAGR Salary predicted by all the
three methods for the year 2011 is lower than the actual Five year CAGR Salary value of
11.7%. Yet, it would not be erroneous to infer from the regression methods that the five
year CAGR Salary for 2011 would lie close to the range 11.44% - 11.65%.
The forecasting potential of the above regression models essentially depends upon
availability of credible forecasts of macroeconomic variables. Forecasting these
macroeconomic variables is not only difficult without sophisticated modelling tools, but
also beyond the scope of this study. Although cubic trend lines fitted well to available
historical CAGR GDP data; as time increases the forecasted CAGR GDP values cease to be
reliable. Curve estimation of CAGR CPI and the highly volatile CAGR CNX500 involves
immense complexities. So, the regression models can give a broad idea regarding the
likely values of CAGR Salary for near future only, till the period for which forecasted
macroeconomic indicators are credible and are likely to closely conform to actual values.
Unforeseen economic shocks can reduce the credibility of the forecasts of these
macroeconomic indicators, rendering salary forecasts inaccurate.
35

The positive relation between CAGR Salary and CAGR GDP can be inferred from the first
two regression methods. Although a negative relation is observed between Five Year CAGR
Salary and Five Year CAGR GDP in the last regression method involving sine time; the small
size of data which shows reverse movements of the two series in just two years may not
necessarily invalidate the inference of a positive relation between CAGR GDP and CAGR
Salary in the Indian economy. Another important observation from the regression exercise
is the opposite trends of CPI Inflation and Salary. Salary growth rate does not increase as
CPI Inflation rises, rather it falls. So, rising cost of living may be secondary to other
impacts of inflation on profitability of a firm in influencing salary budget decisions.
Analysis of macroeconomic factors provides a holistic view of how Indian private sector
salaries respond to economic changes. Salary decisions are not limited to labour market
movements and firm level issues like profitability, employee performance etc.
Developments in the macro economy also influence Indian private sector salaries. There
are possibilities to explore these economic relationships and arrive at different ways of
projecting salary growth rates.
36

Bibliography:
Determination of Executive Compensation in an Emerging Economy: Evidence from
India:Arijit Ghosh; Indira Gandhi Institute of Development Research.
Liberalization of Remuneration Guidelines in India and its Effect on Managerial Pay:
Evidence from Large Corporations: Sen and Sarkar; Vikalpa 1999
Employment Outlook and Salary Guide 2012: Kelly Services.
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Understanding Salary Escalation Trends in Indian Private Sector

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UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

INDIAN PRIVATE SECTOR

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

In an economy which embraces a number of

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

7. SALARY TRENDS-RECENT PAST

Data sources, definitions and limitations:

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

Private sector salary growth rate

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

8. ANALYSIS OF HISTORICAL DATA

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

Salary Index- Historical

Expon. (Salary Index)

Poly. (Salary Index)

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

Actual Exponential Quadratic

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

Salary Index Projection

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

Observations and suggestions from readers:

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

5.52 3.67 3.60

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

R Square Adjusted R Square Std. Error of the Estimate

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

R Square Adjusted R Square

R Square Adjusted R Square

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

A paper prepared by the Research Department- Institute of Actuaries of India-Oct13 |

UNDERSTANDING TRENDS IN SALARY ESCALATION RATES IN

Salary and GDP

Salary & GDP rates (Percentage)