India Inc seems to have doled out salary hikes to their employees despite the

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difficult business environment, going by the data on wage costs of companies in the first quarter ended June 30. As per data compiled by Capitaline, employee costs for companies have gone up 8.23 per cent in Q1 as against the same period in 2008. On a sequential basis, the employee costs have gone up by 2.54 per cent.

However, the growth is much lower than the wage costs for the full year ended March 31. The employee costs were higher by 21.13 per cent last financial year as against the same period in 2008.

Experts said they anticipate salary hikes to be unbalanced across companies this year as the business environment is different across the sectors. “We expect the salary hikes to be skewed this year,” said Dilip Bhat, joint managing director at Prabhudas Lilladher. Companies in the auto sector, for instance, announce bonuses in Q1.

Mahindra & Mahindra has seen 38.76 per cent rise in employee costs in Q1 while Maruti Suzuki saw employee cost going up by 20.14 per cent. The visa costs for IT companies comes in the first quarter, and hence the costs will be higher in the quarter. Despite this, Infosys Technologies reported just 9.52 per cent rise in employee costs. The IT major’s net employee strength also had come down by 945 people in the first quarter.

Tata Consultancy Services’ employee costs for the quarter were up by 13.76 per cent. However, Wipro’s employee costs were up only 1.20 per cent in Q1 even after adding 710 net employees in the first quarter.

Manufacturing sector also saw an increase in wage costs, mainly due to expansion activities. JSW Steel, for instance, has seen 18.84 per cent increase in employee costs for the April-June 2009 period. “We have added about 1,500 people in Q1. We have commissioned our Vijaynagar facility, whe-re we expanded our (steel-making) capacity from 3.8 million tonnes to 6.8 million tonnes,” said Seshagiri Rao, CFO at JSW Steel said. “Our wage costs will increa-se in coming quarters because we will be hiring more people as we expand our capacity further,” he added.

Reliance Industries (RIL) has seen employee costs falling by 16.13 per cent while Tata Steel saw the costs dropping by 7.27 per cent during the period. Reliance Communications’ employee costs fell 16.77 per cent. Ranbaxy Labs (up 44.62 per cent), Lupin (up 25.37 per cent), MTNL (up 22.42 per cent) and L&T (up 28.70 per cent) were some of the companies that saw better-than-average rise in wage costs.

Reliance Capital (down 51.09 per cent), SAIL (down 51.66 per cent), Suzlon Energy (down 23.28 per cent) and Tata Steel (down 7.27 per cent) saw sharp decrease in employee costs. The data on total nu-mber of employees for the Q1 is not available as most companies report it only at the end of the financial year.

“The rise in employee costs in Q1 is not very significant. But, employers will have to increase salaries if they do not want to lose people,” opined Manish Bhandari, VP & portfolio manager — equity, ING Investment Management (India).