| | Western companies face
competition for top
talent not only from
their peers, but also
from companies in other
countries that have a
lower cost of living and
a lower tax rate,
according to research
from global management
consultancy Hay Group.
Hay Group's research
showed that management
in the US and Western
Europe is poorly paid
compared to emerging
economies. American
managers are ranked just
24th in the world pay
league table of 46
countries, with a buying
power equivalent to an
average salary of
$104,905 when tax and
cost of living are taken
into account.
Saudi Arabia and the
United Arab Emirates are
at the top of the list,
with average salary
buying power in excess
of $220,000. In emerging
economies such as
Russia, Turkey and
Mexico, managers are
enjoying far higher
levels of buying power
for their pay than their
counterparts in the US
and other developed
markets, earning an
effective average salary
of more than $150,000.
Indeed, Switzerland,
Germany and Ireland are
the only European
countries to make it
into the top 20 | |
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| | countries for management
buying power.
"Companies are
operating in an
increasingly open and
competitive global
economy, and emerging
markets are offering
managers higher
disposable incomes than
established countries –
which is making these
locations an attractive
prospect for management
talent," said Iain
Fitzpatrick, director
reward information
services for Hay Group
North America.
"This makes sobering
reading for companies in
Western Europe and the
US, who face not only
local competition for
managerial talent, but
an increasing threat
from buoyant new
economies."
Hay Group's World Pay
Report was compiled by
comparing detailed
cross-country pay
information (total cash,
which is equal to base
salary plus any
annualised short-term
variable incentive) from
Hay Group PayNet, at
management (head of
function/department)
level. The study used
Hay Group's globally
consistent data, which
means that meaningful
comparisons can be made
around the world. Cost
of living and tax were
then taken into account | |
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| | to reveal disposable
income levels – the true
purchasing power of
managerial pay – for 46
countries in North
America, South America,
Middle East, Africa,
Europe and Asia Pacific.
"The continued growth
of emerging markets is
creating unprecedented
demand for senior
talent," said Steve
Marsden, global director
of reward information
services at Hay Group.
"The resulting talent
shortage, plus the
premiums paid to
managers in these hot
markets, is inflating
management pay in less
advanced economies."
Top of the tree
Managers in the
oil-rich, tax-free
states of Saudi Arabia
and the United Arab
Emirates take home the
highest disposable
incomes worldwide, with
pay equating to buying
power in excess of
$220,000.
"Managers in Saudi
and the UAE enjoy
soaring levels of
take-home pay, as
employers in this region
pay more attention to
cash rather than
performance-based
incentives," said Vijay
Gandhi, reward
information services
manager for Hay Group
Dubai.
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"But as demand for
experienced managers
remains high, companies
in the region are
looking more closely at
the use of long-term
incentives as a way of
attracting and retaining
international talent."
The international
finance and trade centre
of Hong Kong ranks third
in the remuneration
stakes, with pay buying
power equivalent to
$203,947.
"Pay rates for
management have
traditionally been high
in Hong Kong – up to
more than a third higher
than other Asian cities
such as Singapore – with
management buying power
enhanced by low rates of
income tax," said Hern
Yin Goh, reward
information services
manager for Hay Group
China.
Management pay in
Western European
countries fares poorly
by comparison.
The UK is ranked just
40th in the management
pay stakes, Germany is
placed just 19th, with
France 31st, and Italy
28th.
Only Spain, where the
cost of living is lower,
remains reasonably
placed, taking 12th spot
with disposable incomes
of around $128,197.
China and India
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In comparison,
China's rapid economic
development is reflected
in disposable incomes at
management level
averaging $126,281 –
placing the country 14th
in the world pay table.
However, despite its
impressive economic
development, the picture
is far less encouraging
in India. At 36th in the
global pay stakes,
managers in the country
have buying power of
just $92,750.
"Chinese companies
have realised the need
to attract management
talent as economic
acceleration continues
apace, having a
significant upward
impact on managers'
pay," said Hern Yin Goh.
"However, India
benefits from a large
tier of well educated,
English-speaking local
talent, making
management pay more
immune to the
international market.
That said, managers' pay
is increasing at
double-digit rates in
India – between 15% and
20% – so it is unlikely
to stay at the bottom of
the pay table for long."
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