What is the salary of the NSDC staff

Wage and Non-wage Costs - India


1 Wage and non-wage costs - India Contents General information on the labor market Trade unions Wages and salaries Premiums, commissions, additional benefits Social security contributions Labor law Legal basis Contract conclusion Rights and obligations of the contracting parties Contract termination Contact addresses: Wages are to rise by 10.3% in 2016 / Demographic dividends can offer new growth opportunities / From Heena Nazir (March 2016) Mumbai (GTAI) - In India, 12 million new workers enter the market every year. Using the potential and reducing the inflow into the informal sector is the basis for economic growth. Large numbers of jobs can only be created by building up industry. The high demand for qualified employees is also driving up wages and salaries in a young society like India. The search for well-trained specialists remains difficult. General information on the labor market According to expert estimates, around 60% of the population in India derive their income directly or indirectly from agriculture. However, the productivity of the sector is low and only contributes 14% to the gross domestic product (GDP). Rural poverty is widespread. This is why the next generation mostly looks for employment outside of agriculture. However, there are not enough suitable jobs. The most important branch of the economy in terms of its contribution to GDP is the service sector (2014/15: 58%), which employs 27% of the population. Industry accounts for 16% of GDP and generates 13% of jobs. The structure of the labor market in India has changed significantly and is characterized by the change from an agricultural country to a service economy, which presents the country with particular challenges. The majority of the population and job seekers are low-skilled. Almost 30% of Indians have no secondary education and only a tenth of the population have vocational training. 1

2 However, the service sector can only serve to a limited extent as a basin for freelance workers with a low level of education. In the call centers of the IT industry, for example, mostly young university graduates with a knowledge of English work. In these companies, low-skilled workers can only find work as cleaners, gardeners, etc., and there are not many of these positions in IT companies anyway. For the job seekers, jobs in industry are urgently needed because there are employment opportunities here for the less qualified. The Indian labor market is characterized by a dichotomy between the unorganized and the organized sector. According to a study by the Institute of Human Development, around 92% of the workforce work in the non-organized sector. Many are "self-employed" workers or work in small and micro businesses. Almost 30% of the employees work as day laborers. According to experts, the labor rate in the organized sector has continued to decline in recent years. An estimated 60% of GDP is generated in the non-organized sector. General labor market data Population (in millions) 1) 1,259.6 economically active persons (population older than 15 and younger than 65 years, in millions) 767.7 employment rate (population older than 15, in%) 2) 50.9 unemployment rate, official (in%) 3) 4) 4.9 Illiteracy rate (in%) 1) 26.0 University graduates (in millions per year) 5) 5.0 1); 2); 3) 2013/14 (April 1st to March 31st); 4) city: 5.7%, rural: 4.4%; Women: 7.2%; Men: 4.0%; 5) Estimation sources: Census of India 2001 and 2011; Labor Bureau - Ministry of Labor and Employment "Third Annual Employment and Unemployment Survey ()", press releases, calculations Germany Trade & Invest, February 2016 According to the "Fourth Annual Employment and Unemployment Survey "(2013/14) to 4.9%. Youth unemployment is particularly high. In 2014, 15.3% of young people between the ages of 15 and 29 were unemployed. In fact, these numbers are likely to be significantly higher. The employment rate of women is among the lowest in the world at 31% and is the second lowest in South Asia after Pakistan. In the Global Competitiveness Report 2015/2016, the World Economic Forum rated the efficiency of the Indian labor market as low, ranking 103rd (PR China 37th). The country is particularly poorly positioned in terms of the proportion of women in the workforce, staff reduction costs and the effects of the tax on job motivation. The quality of training, both academic and non-academic, varies greatly. While the Indian Institutes of Technology (IITs) and the Indian Institutes of Management (IIMs) enjoy an excellent reputation worldwide, most universities lag far behind this quality of education. According to the "National Employability Report 2014" of the Aspiring Minds Institute, less than 20% of graduates with a degree in engineering are unsuitable for such employment because they lack English language skills and cognitive skills. Despite the high proportion of unsuitable graduates, the absolute number of qualified university graduates is considerable. These university graduates need not shy away from international comparison. The search for suitable workers is becoming increasingly difficult. 2

3 There is no systematic vocational training comparable to the dual system. Vocational training takes place at government training centers (Industrial Training Institutes - ITIs), private training centers and colleges. According to German company representatives, the training is usually inadequate. There is little practical relevance, the equipment is out of date, the curricula are outdated and the trainers are not sufficiently qualified. In addition, there are too few training places available. Only around 5% of all employable people have a professional qualification. It is only 2% for those under thirty. It is estimated that only one third of school leavers in a given year can be offered training. The majority of these training opportunities are geared towards a higher technical or academic degree. For foreign companies in the manufacturing sector, the shortage of skilled workers is one of the greatest challenges when it comes to investing. Structured, demand-oriented vocational training in India has so far mainly been based on individual commitments by companies that have teamed up with private or state training institutions. Due to the lack of external training opportunities, many German companies have created their own internal training structures. However, in-house training is mostly limited to the immediate activity and background knowledge such as materials science is also rarely imparted. Because of the high fluctuation, many companies do not want to invest in comprehensive training. The shortage of qualified employees runs through almost all industries. According to a study by the Indian industry association Federation of Indian Chambers of Commerce and Industry (FICCI), the increasing shortage of skilled workers is noticeable both in the manufacturing industry and in the service sector. For example, there is an urgent need for engineers for the automotive and automotive supply industries or natural scientists for research-intensive industries such as bio- and nanotechnology as well as the chemical and pharmaceutical sector. But a shortage of skilled workers is also becoming apparent in the low-wage sector and the construction industry. The National Skill Development Corporation (NSDC) has published studies on the development of labor and qualification needs in 20 high-growth industries by 2022 (knowledge-bank). The government wants to counteract the shortage of qualified workers with a large-scale education program "Skill in India". Ambitious goal: 500 million Indians are to be trained by 2022. According to experts, this value is not realistic. So far, the implementation is rather difficult, and 100 million trained workers would be a success. The private sector is to be integrated in terms of content and finance in the form of a Public Private Partnership (PPP). The commitment is supported by the two major industry associations, the Confederation of Indian Industry (CII) and FICCI. More and more companies are using the services of personnel consultants to fill management positions. The range of Indian and international recruitment agencies is correspondingly large. The agencies charge around 25 to 30% of the gross annual salary for successful placement at a higher management level. It is not uncommon for companies to receive hundreds, if not thousands, of applications in response to job advertisements, the majority of which usually do not even meet the minimum qualifications. In the case of labor-intensive companies in particular, agencies therefore also pre-select candidates. Major recruitment agencies include Aon Hewitt, Kelly Services, Manpower, and TeamLease. The recruitment of graduates from renowned Indian universities such as the IITs or the IIMs takes place within the framework of "campus placements". At these events, companies have the opportunity to present themselves and make contact with suitable candidates. The procedure is subject to very strict regulations on the submission of job offers by companies and a high degree of transparency with regard to the salary offered. 3

4 Trade unions The influence of the numerous company trade unions and the few umbrella trade unions is great. Most of them have close organizational ties with political parties. The unions are hardly networked with one another. Each company union acts more or less independently. There are no nationwide collective agreements, agreements are usually concluded on a company-specific basis. Wages and salaries According to a study of the salary development of the personnel consultancy - "Aon Hewitt India" - wages in India will increase by 10.3% in 2016. The very high growth rates of up to 15% in 2008 will hardly be achieved. Wage increases are often a response of companies to adapt to inflationary developments. Therefore, high wage increases are generally not unreservedly positive, but also a sign of high inflation values. It should be noted here that India had lower inflation (5.8%) in the 2015 calendar year, especially compared to 2008 (8.4%). In the past five years, the wage increase has leveled off at around 10% on average. Aon Hewitt's chairman advisor, Anandorup Ghose, speaks of a new "normal". A similar increase in the wage level is also expected for the coming years. Overall, there is a stronger connection between performance and pay. Since highly qualified professionals are rare, they get paid for their work accordingly. The top performers saw an average increase in wages of 15.3% in 2015. This is more than the average increase for employees (10.6%) who only do their normal workload. This means that companies do not hesitate to differentiate strictly on the basis of performance and then allocate a disproportionate share of the overall increase in the budget to the top performers. This promotes a culture of excellence. This gap has widened over the past decade. The expenses for variable remuneration have grown steadily in the context of total salaries in recent years. The variable remuneration is expected to increase by 17.4% on average in 2016. This indicates a fundamental change in pay, as employers pay a larger percentage of the remuneration of individual employees variable. The start-up companies saw the highest wage increases in 2016. These are on average 15.6%. Furthermore, the newly founded commercial enterprises are very popular as employers, as they allow their "high potentials" to grow with the company, also with a view to the area of ​​responsibility. Start-ups are currently one of the most important growth engines of the Indian economy, they create urgently needed jobs and are accordingly heavily promoted by the Indian government. As such, they receive tax breaks, for example. The life science and media industries are among the highest paying employers in India. In the life sciences, experts expect growth of up to 11.6% in 2016 - this is lower compared to the same period in the previous year (12.0%) - but it is still very strong compared to other sectors. In the consumer goods industry, wages are to be increased by 10.8%. This percentage has remained constant over the past five years. The hi-tech industry announced salary increases of 10.8% for 2016. This increase is unexpected. In the industry, labor costs make up a large proportion of total costs. Industry experts fear that products will become more expensive and that demand will fall as a result. Financial services and the telecommunications industry brought up the rear in terms of wage increases. 4th

5 Average wage increase by industry in 2014 and 2015 (in%) Total India = 10.0% change 2014/2015 Life sciences 12.0 11.6-3.3 Consumer goods 10.6 10.8 1.9 Chemicals 10.8 10, 7-0.9 automotive 10.4 10.7 2.9 mechanical engineering / manufacturing industry 10.6 10.3-2.8 media n / a 11.2 - high technology 10.7 10.8 0.9 11.7 10.2-12.8 Hotels 9.8 9.9 1.0 IT-based services 10.7 10.8 0.9 Energy 10.2 9.9-2.9 Retail 9.5 10, 7 12.6 Telecommunication services 9.9 9.7-2.0 Financial sector 9.4 8.8-6.4 Infrastructure 9.9 9.8-1.0 Cement industry n / a 9.8 - Transport and logistics n / a 9.7 - Steel industry 9.4 9.3-1.1 Source: AON Hewitt "Annual Salary Increase Survey", March 2016 The highest salaries are paid in the financial center of Mumbai. According to the personnel consultancy Team Lease Services, the metropolis leads the ranking of salaries on the subcontinent. New Delhi is in second place. Bangalore, Kolkata and Chennai are also well paid. In the so-called tier 2 cities - that is, the 35 "small" megacities such as Hyderabad, Coimbatore, Pune - wages and salaries have risen sharply in recent years. In general, the following applies: the further you move away from urban regions, the lower the references. According to the latest official statistics from the Indian government, there are only concrete details of the salary development up to the financial year 2011/12. Average gross daily wages by federal state *) 2011/12 (in ir) 2011/12 (in US $) National average 339.96 5.40 Capital region: Delhi 390.69 5.80 High-wage region: Maharashtra 542.55 8.06 Low-wage region: Gujarat 260 , 01 3.86 *) only regularly employed persons between 15 and 59 years 5

6 Source: National Sample Survey Organization, 2011/12 (latest available figures) In line with the market trend, most German companies have also increased their salaries by 10%. When it comes to the annual salary increases for their local workforce, they usually orientate themselves on the relation of inflation to retail prices. Employees with low incomes of, for example, 100 to 150 euros per month usually receive higher salary adjustments than local employees at upper management levels. Smaller salary increases with higher incomes are often compensated with additional one-off bonus payments, for example in the amount of a monthly wage. Some German companies are aiming for more performance-related pay. The trend towards the payment of variable salary components linked to operational success and direct personal performance is growing not only in the upper income bracket, but also in the middle income bracket. From middle management upwards, the wages paid in the private sector are largely the result of individual negotiations between employees and employers. They can vary considerably for comparable positions in an industry. There is also a wide range in terms of remuneration according to function within a company. The decisive factors are the location, professional experience and other factors such as the reputation of the university attended. Salary increases between 10 and 30% per year are not uncommon, especially in management positions. There are lower salary limits for unskilled workers. The central government has set a minimum wage of 66 to 125 ir (Indian rupees; exchange rate at: 1 euro = 73.63 ir; 1 US $ = 67.04 ir) per day - depending on the type of work - for its area of ​​responsibility. The lower value should not be undercut in the states either. Practice shows that deviations not only take place upwards, but also downwards. At the level of the lower income categories, the unions often negotiate wages for the respective company with the management. There are no area tariffs. The downside trend is pegged to inflation, as measured by the consumer price index for industrial workers. The unions have a major influence on wage negotiations and labor market regulations are very restrictive. 6th

7 Average gross monthly wages according to selected positions in 2015 (in ir) position *) 0 to 2 years he 2 to 5 years he 5 to 8 years experience sales representative (door-to-door sales) 10,700 12,600 18,800, team leader 14,700 20,600 32,200, sales representative 12,500 17,200 28,800.Business Development Executive 37,900 Technical, electrician 12,500 17,200 29,200, technical draftsman 19,300 28,700 43,500, project engineer 20,400 30,200 44,100, customer service mechanic 18,600 22,500 45,000 worker, driver 10.100 13,000 19,200, 700, 12,500, machine operator 7,900, 10,100, machine operator 7,900, 12,500, machine operator 7,900 I. T-Support (Desktop Engineer) 15,800 20,800 32,70, IT engineer 19,000 29,100 40,800, SAP developer 24,000 41,200 67,900, system administrator 26,300 32,400 50,800 *) for better readability, the respective terminology for the job titles in this table is used for both male as well as the feminine form. Source: TeamLease, "Salary Primer 2015", March

8 Average gross wages according to selected positions in 2014 Salary (in ir) activity etc. Managing director of a larger branch 3) Managing director of a small to medium-sized company Sales manager, higher level Sales manager, middle level n / a k. Monthly salary, which is usually paid on the occasion of the Diwali holidays in October or November. At the same time, it represents the minimum allowance of 8.3% of the annual salary regulated in the "Payment of Bonus Act", which is to be paid regardless of the operating result, provided a company has twenty or more employees and does not exceed the respective monthly salary ir. After exceptional business successes, higher allowances are sometimes granted on a voluntary basis. The variable component of the gross annual salary averages 16% and is usually paid once a year. For salespeople, however, payment is usually made monthly or quarterly. As a rule, employees also receive monthly allowances, for example for transport or accommodation. The wages are generally paid out at the end of the month for the past month. Prepayments are not uncommon. Long employment with the company is rewarded. In the event of termination through no fault of your own, severance payments - for example half a month's salary per year of membership - are agreed. For executive employees, the allowances represent a significant part of the wages. SOCIAL SECURITY CONTRIBUTIONS There are two social security contributions for Indian employers and employees. The state pension is provided by the Employees' Provident Fund, in the employer for employees with a month 8

9 Income of up to ir must be paid (change since) if you have 20 or more employees. The contribution is 12% each for employers and employees. The Employees' State Insurance Act protects low wage earners against illness, accidents at work, and more. Insurance is compulsory for employees with a monthly income of up to ir if a company has ten or more employees. Employers and employees make contributions in different amounts of 4.75 and 1.75% of the basic salary. From then on, the minimum monthly pension was set at ir. In the new 2015/16 budget, a tax break for payments into the pension fund was also announced. Inflation Factories Act: 48 hours, no more than 9 hours per day. Factories Act: Standard working hours plus overtime maximum 60 hours per week; a maximum of 50 overtime hours per month 3 national holidays plus regional holidays 1 day for every 20 days worked; per 15 days for minors Factories Act: in principle not by the employer, but by the social security agency for up to three months 9

10 LEGAL BASIS Indian labor law is considered complex, outdated and in urgent need of reform. Rules on employment relationships can be found scattered across a variety of laws. The most important ones to be mentioned in the area of ​​individual labor law are the Industrial Disputes Act 1947, the Minimum Wages Act 1948, the Contract Labor (Regulation and Abolition) Act 1970, the Workman's Compensation Act 1923, the Payment of Wages Act 1936, the Payment of Gratuity Act 1972 and the Payment of Bonus Act In addition, there are numerous special regulations for certain segments and industries, such as the Factories Act 1948, the Sales Promotion Employees (Conditions of Service) Act 1976, the Plantations Labor Act 1951 or the Beedi and Cigar Workers (Conditions of Employment) Act 1996 or the respective state Shops and Establishment Act. The rule here is that collective bargaining provisions generally take precedence over statutory requirements. CONCLUSION OF A CONTRACT In principle, the general freedom of contract applies. A distinction is made between employees and workers. The conclusion of written employment contracts is not mandatory and only common in the context of more demanding activities. In view of the high density of statutory regulations, the protection of the worker is guaranteed even without an employment contract. Employment relationships can be entered into for a limited or unlimited period. As for wages, the employer is bound by the power of the Minimum Wages Act, government-mandated minimum wages. These vary depending on the industry, age and length of service and are regularly adjusted to reflect inflationary developments. As a rule, different types of (and sometimes regionally varying) grants are also added. The most important regulation is the one with effect from the reformed Payment of Bonus Act. This looks after Sec. 10 offers an annual bonus of 8.33% of the annual salary (at least 100 ir) to employees with a monthly salary of up to ir, regardless of the company's success. RIGHTS AND OBLIGATIONS OF THE CONTRACTING PARTIES According to Sec. 51 Factory Act 48 hours; at least one day a week is free. Overtime is permitted to a limited extent and according to Sec. 59 Factory Act with double the hourly wage normally paid. Corresponding regulations can also be found in other special laws such as the Mines Act or the Plantations Labor Act. Paid vacation leave is available to a worker according to Sec. 79 Factory Act only if he has worked for at least 240 (190 in mines) days in the previous calendar year. The number of vacation days for adult workers is calculated from a quotient between the number of working days worked and the number 20, so that every 20 working days entitlement to one vacation day arises. In the case of minors, this is the case every 15 working days. According to the Shops and Establishment Act of the respective state, office workers usually receive a fixed number of "casual leave" days in addition to regular vacation, that is, paid absence on individual days that can be used for visits to authorities, family matters, etc. A company determines the continued payment of wages in the event of illness taking into account the regional Shops and Establishment Act or other applicable legal provisions. Because of the cultural and religious diversity, there is no nationwide uniform list of public holidays. A list of the holidays in India in 2016 can be found at Markets / Business Practice / Holidays, t = holidays-in-abroad india, did = html. 10

11 TERMINATION OF THE CONTRACT In principle, the termination (retrenchment) of an employee requires a special reason such as long-term inability to work, misconduct or operational requirements (lay-off). The termination is subject to the written form and has to contain a reason. According to Sec. 25F Industrial Disputes Act one month. Section 25C Industrial Disputes Act gives the employee a right to severance pay. The amount of the entitlement depends on the length of service and the pay class: For every completed year of service, the employee is entitled to a severance payment equal to half a month's salary. The protection against dismissal applies according to Sec. 25A and 25F Industrial Disputes Acts only apply if the employee has been with the company for at least one year without interruption and if the workforce does not fall below 50 employees. Employees in management positions cannot rely on protection against dismissal. Companies that have employed no fewer than 100 employees in the past twelve months require, according to Sec. 25M (in conjunction with Sec. 25K) Industrial Disputes Act for an operational dismissal also an official approval, which is only granted in about 5% of all cases the statutory notice period is then three months (Sec. 25N Industrial Disputes Act). If the operational requirement for termination is rooted in an energy shortage or in a natural disaster, there is no need for a permit. Often the workers try to get the unions involved. Then you can usually assume that finding a solution will take longer. But even after a dismissal, the person concerned can sue a labor court, and this is done relatively often, if necessary with the help of the trade unions. A path through other instances is not ruled out. Compensation payments are customary or explicitly stipulated in the relevant laws such as the Industrial Disputes Act. Under the Contract Labor Act, care must be taken to ensure that a worker who works 120 days a year at a company is treated as a permanent employee. Contact addresses: Practical information for expatriates, such as information on educational institutions, medical care and cost of living, can be obtained from the Federal Administration Office. Federal Office of Administration, Information Center for Emigrants and Foreign Workers Internet: Employees' Provident Fund Organization 14, Bhikaiji Cama Place, Bhavishya Nidhi Bhawan, New Delhi Tel .: /; Fax:, Internet: Council of Indian Employers Federation House, Tansen Marg, New Delhi Tel .: /; Fax: Internet:

12 Personnel recruitment: Aon Hewitt Platina, 4th Floor, G-Block, Bandra Kurla Complex, Bandra East, Mumbai Tel .: / Internet: Kelly Services India Private Limited India Corporate Office Unitech Cyber ​​Park, Tower C, 10th Floor, Sector - 39, Gurgaon Tel .: /; Fax: Internet: Manpower India Services (MIS) Outsourcing Pvt. Ltd. D-185 B & C, Okhla Indl. Area, Phase - I (Main Road), New Delhi Tel .: /, -501; Fax: -502 Internet: Indo-German Chamber of Commerce Maker Tower 'E', 1st floor, Cuffe Parade, Mumbai Tel .: /; Fax: Internet: Wilma Knipp GTAI CONTACT Wilma Knipp +49 (0) Your question to us 12

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