PAY DATA
UK senior managers earn lowest real pay in Western Europe
Disposable income for senior managers in UK firms is amongst the lowest in the world, claims a new study by Hay Group.
The report places UK executives 47th in the real pay stakes out of 51 economies analysed, down from 40th out of 47 last year.
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Hay Group’s analysis finds senior managers in the fast-growth economies of the Middle East, Asia, and Eastern Europe enjoying the highest spending capacity, as demand for management talent far outstrips supply in these markets. Real pay in Western Europe, the US and Scandinavia lags by comparison.
British executives are now the fifth poorest in real terms, ahead of only Indonesia and the Scandinavian economies. “The UK’s lowly ranking reflects the combination of relatively high tax rates and cost of living than in developing economies,” the study concludes.
Rest of Western Europe: Managers in other Western European countries tend to have spending power towards the middle-to-lower range. Senior executives in Austria (15th in the table), Germany (18th) and Switzerland (20th) fare relatively well.
Middle East: The oil-driven economies of the Middle East dominate the table. Qatar boasts the world’s best-paid managers, who earn over two and a half times the salaries of their British counterparts in real terms. Executives in the United Arab Emirates are the next best paid, while those in Oman (6th) and Kuwait (7th) also enjoy over twice the real incomes of British managers.
Emerging economies - Asia: As might be expected, managers in emerging economies enjoy buoyant disposable incomes. China lies 17th in the management pay table, with executives earning over 1.5 times the real salaries of their British colleagues. Thailand is higher still (10th). Disposable income in India (38th) remains lower than in other emerging economies. However, with rapid economic acceleration fuelling headline salary increases of 14% a year, disposal income for Indian managers is expected to rise.
Emerging economies – Central and Eastern Europe: The spending power of managers in Central and Eastern Europe continues to outstrip that of those in Western Europe. Turkey is the highest placed European country, at 5th place. Romania and Russia are 8th and 9th respectively, with Poland 14th and Lithuania 16th.
USA: In line with many other developed economies, the US is ranked firmly towards the bottom of the table in 41st place. However, factors other than economics may have an influence. Department head roles are likely to be further down the corporate ladder in US firms than those in many emerging economies.
A final word
“As the UK creeps toward recession, British companies will be increasingly constrained by tightening budgets over the coming year. Pay rises will be driven by what companies can afford, rather than what’s needed to compete in the global management market. As a result, UK firms could risk a brain-drain to higher growth economies, as executives seek better standards of living. UK plc will need to be smarter about how firms allocate resources. Best-performing companies will carefully target pay increases to key roles and high-performing individuals.” - Peter Christie, Hay Group.
Want to know more?
Title: World Pay Report 2008, Hay Group.
Survey details: The report compares detailed salary information for 51 countries from Hay Group PayNet. Hay Group related pay to cost of living and tax rates, to calculate real pay – the true purchasing power of executive salaries.
The study defines senior managers as heads of function or department in large multi-national companies.
Availability: Contact Hay Group in London, tel: 020 7856 7000.
Hay Group is a global consulting firm that works with "leaders to turn strategies into reality". "We develop talent, organise people to be more effective, and motivate them to perform at their best." With 86 offices in 47 countries, it works with over 7,000 clients across the world. For more information, please visit www.haygroup.co.uk.