Lower salaries!

The headlines say it all, economic slowdown is definitely going to impact salaries in the corporate sector. Airlines seem to hog the headlines as of now, but from what I hear, other industries are also be impacted.

With layoffs and lower attrition figures, it is clear that HR departments will no longer feel the same pressures to grow salaries as a retention tool. The other pressure on salaries comes from higher offers to fresher’s i.e. the new batch gets hired at salaries higher than the previous batch. Looks unlikely to happen in the short run.

Is this an Indian phenomenon? Not really, it might actually be worse in the developed world. From what I read, it looks like that at least for now, there is a lot of pressure to regulate salary. How come such a socialist attitude in the bastions of capitalism? One reason is that government money is being pumped into their financial institutions, and with that comes pressure to rein in the galloping pay packets.
Wall Street Journal reports that “More countries move to curb executive pay, at companies with and without government rescues.
AUSTRALIA: Prime minister seeking executive-pay rules for finance firms to discourage excessive risk-taking; he will then propose the rules to the international community.
FRANCE: Business leaders adopted code of conduct that prevents 'golden parachute' exit payments for failed executives.
GERMANY: Compensation for top executives at banks tapping government bailout funds capped at €500,000; bonuses, stock options and severance barred.
NETHERLANDS: Top executives of ING Groep NV agreed to give up 2008 bonuses and limit severance if dismissed in exchange for government financial injection.
SWEDEN: Participating banks in proposed bailout must agree with government to limit compensation for 'key executives.'
SWITZERLAND: UBS AG agreed as part of recapitalization to use international best practices for executive pay and government monitoring.
U.S.: Limits on corporate-tax deductions on executive pay and 'golden parachutes.' Firms also must recover awards based on inaccurate results and bar incentives for 'unnecessary and excessive risks.'
U.K.: Government is taking board seats at two big banks, permitting more oversight of pay practices; regulator wants investment banks to drop pay practices that may have encouraged risk-taking.”

I am praying that the Indian government does not get into the act. With their usual ham-handed approach they are sure to get it wrong and drive out talent from Indian industry.