INTERNATIONAL REWARD
Buying power gap narrowest in Western Europe
The gap between the buying power of senior managers and that of junior staff is smallest in Western Europe and widest in the countries of Latin America.
This is the finding of a recent survey from consultants Watson Wyatt, based on an analysis published in its annual Global 50 Remuneration Planning Report. The report contains the latest pay and benefits information for 50 benchmark positions from a range of industries across 58 countries and Watson Wyatt explains the variations by differences in pay and taxation structures.
Methodology
To reach its conclusions, Watson Wyatt examined two representative positions from each country, “senior manager” and “administrator”. These roles relate to grades 18 and 8 respectively in the firm’s global grading job value framework. All salaries were converted to US dollars using this global grading system, while tax and cost-of-living data was provided by ECA International.
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In addition, the cost-of-living indices used a US base to show relative buying power, while exchange rates were those prevailing at 1 July 2007.
UK in 28th position
In the list of 50 countries, the UK was placed 28th, with a gap in buying power between the two positions of 5.4 times. This equated to an average buying power of $32,408 for an administrator, compared with $174,553 for senior managers.
In contrast, the gap was greatest in Mexico, where the relative buying power of senior managers was over 21 times that of administrators. Adjusted for cost-of-living differences, on average, Mexican senior managers had $348,218 of buying power, compared with $16,372 for Mexican administrators.
Gap smallest in Nordic countries
At the other end of the spectrum were countries such as Norway and Denmark, with differentials of 2.6 times and 2.7 times respectively. Other European countries included France in 34th place and Germany, 39th. These positions equated to differentials of 4.5 and 3.8 times.
Perhaps more surprising was the finding that the United States was also placed quite low down at 36th position with a 4.4 times differential.
A final word
"Different pay and taxation structures are the main drivers of these differences. For example, the Nordic countries have high and progressive tax structures, while companies in most Latin American countries reward senior staff highly but are less generous towards more junior staff.” - Anne G. Severeyns, a senior consultant at Watson Wyatt.
Want to know more?
Title: Global 50 Remuneration Planning Report, Watson Wyatt.
Availability: The report costs €2,000 for online access and €2,200 for online plus print copy delivery and is available from Watson Wyatt Data Services EMEA, email: customerservice@watsonwyatt.com or tel: +32 2 678 15 11.
Watson Wyatt is the “trusted business partner to the world’s leading organisations on people and financial issues”. The firm’s global services include: managing the cost and effectiveness of employee benefit programmes; developing attraction, retention and reward strategies; and delivering related technology, outsourcing and data services. Watson Wyatt has 7,000 associates in 31 countries and is located on the web at www.watsonwyatt.com