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Hay Group’s World Pay Report, compiled using Hay Group PayNet®, one of the world’s most comprehensive pay databases, compares detailed salary, bonus, tax and cost-of-living information at senior management (departmental head) level, in order to reveal real executive pay levels for 29 countries across the world. TURKEY TOP OF THE PECKING ORDER FOR SENIOR MANAGERS
Senior managers in Turkey take home the highest real pay levels worldwide, earning an average net salary equivalent to €79,000 when bonuses, tax and cost of living are taken into account. Hot on their heels, riding high on the country’s outsourcing boom, senior managers in India earn the equivalent of €77,700 in real terms, placing them second in Hay Group’s World Pay rankings.
Eastern and Southern Europe dominate the new world pay map, with Russia’s senior managers third in the pay stakes, enjoying salary buying power equivalent to €77,400, and Poland’s senior managers sixth, with salary buying power equivalent to €76,300 when tax and cost of living are taken into consideration.
Brazil comes in fifth, with senior management salaries pitched at around €76,400 in real terms.
The author of the Hay Group study, Ben Frost, said: “The rapid growth of emerging economies such as India, Turkey, Brazil and Eastern Europe is creating unprecedented demand for senior talent. Our findings reflect the knock-on effect of this: rapidly inflating management salaries in countries where the cost of living is yet to catch up.”
Western Europe fares poorly by comparison with new economies, with the UK ranked 23rd in the senior management pay stakes, offering real pay equivalent to €47,000 once salary has been eroded by tax and cost of living. France is ranked 20th, with real pay equivalent to €51,000, and Italy ranked 19th, with real pay equivalent to €53,000. Germany, viewed as the economic powerhouse of Europe, is ranked just 8th, with senior management salary buying power pitched at €75,700.
Meanwhile Spain’s lower cost of living places the country just ahead of Germany at 7th in the table, with senior management buying power equivalent to more than €75,900.
Switzerland’s status as a high wage nation is confirmed by the study, with the country standing as the lone Western economy in the top five. Switzerland is ranked fourth for senior management pay, with salary buying power pitched at €77,000 in real terms, despite the country’s notoriously high cost of living.
“Companies operate in an increasingly open and competitive global economy. Our research shows that emerging economies are offering executives significantly higher disposable incomes than the Old World – which is likely to make these locations an attractive prospect for senior talent,” said Ben Frost.
“This should make sobering reading for companies in Western Europe and the US, who face not only an increasing competitive threat from buoyant new economies, but a cross border war for managerial talent.”
NORDIC SALARY BUYING POWER NEARLY 50% LESS THAN TURKEY
“Management talent in the Nordics are not adequately compensated for the high cost of living they face,” said Ben Frost, Reward Consultant, Hay Group. “Companies across the region need to consider their pay packages carefully if they are not to see a brain drain to the buoyant neighbouring economies of Eastern Europe.”
The USA also fares poorly compared to buoyant new economies in Turkey, Russia, Brazil and Poland. The USA is ranked 13th in the World Pay league table, offering senior managers only average level salaries, equivalent to buying power of €62,000 when tax and cost of living are taken into account.
Despite more than a decade of economic woes, the world’s third largest economy is ranked 9th in the pay hot spots league, with Japan’s senior managers earning €70,000 in real terms.
“Japan has faced a decade of economic stagnation,” said Ben Frost, Reward Consultant, Hay Group, “But for those senior managers who have retained their jobs, salaries are holding up well and buying power is further boosted by recent years of price deflation, which has reduced the region’s cost of living.”
CHINA OFFERS NO INCENTIVE TO SENIOR TALENT
China’s economic development drive is facing a much-publicised lack of senior management talent, yet the country is offering little incentive to managers in order to redress this. China is ranked 26th in the international pay stakes, offering real senior salaries of just €42,000 – less than a graduate starter salary in Switzerland.
“As an emerging economy, Chinese salary levels remain pegged at a low level, even accounting for the effect of China’s undervalued currency on international comparisons.” said Ben Frost, Reward Consultant at Hay Group. “However, when it comes to attracting management talent, Chinese companies must realise that they are competing in a global market. Ambitious Chinese businesses must develop their own management talent, and be prepared to pay to recruit star players in a tight market.” Hay Group’s World Pay Report: Key Findings
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