Emerging Asian economies lead Global Pay Gap rankings

For immediate release Emerging Asian economies lead Global Pay Gap rankings China, Thailand and Vietnam top global rankings for pay difference between managers and clerical staff Singapore, 7 May 2008 The emerging Asian economies of China, Thailand and Vietnam continued to rank in the top three of a global ranking of pay differences between managers and clerical workers, according to a study released by global management consultancy. The finding comes from a new report based on s global compensation and benefits database, PayNet. The Global Pay Gaps Report analysed PayNet s data on over 12 million employees to determine the difference between the average pay of management level employees and clerical level employees across 61 countries, and how that gap had changed from 2006 to 2007. Countries were then ranked in order of greatest to smallest pay gap. Global talent crunch hits emerging economies hardest The report found that the gap between management and clerical employees was most pronounced in emerging economies, where the overwhelming demand for management talent is inflating senior salaries far beyond the local market for more junior roles. The top third of the list is populated with the faster growing developing economies where the overwhelming demand for key talent is inflating senior salaries far beyond the local market for more junior roles. Unsurprisingly this trend is particularly true for the booming BRIC (Brazil, Russia, India and China) economies with China topping the list with a gap of 11.8 followed by the other countries coming in at 10th (Russia), 14th (India) and 17th (Brazil). www.haygroup.com/sg 1

Minding the gap in Asia The developing economies of China, Thailand, Vietnam, Indonesia and India continue to lead the pay gap rankings in Asia, with China, Thailand and Vietnam topping the global rankings. As is the case globally, the shortage of management talent in these economies has pushed up salaries at the top end, while the less internationally-mobile junior staff are paid in line with local market rates. (See Table A) Country 2006 2007 1 China 10.5 11.8 2 Thailand 10.6 10.7 3 Vietnam 11.7 9.8 4 Indonesia 8.7 9.1 5 India 7.4 7.7 6 Malaysia 6.0 6.0 7 Hong Kong 5.5 5.8 8 Taiwan 6.1 4.9 9 Singapore 4.9 4.7 10 South Korea 3.1 3.7 11 New Zealand 3.1 3.3 12 Japan 3.3 3.2 13 Australia 3.2 3.2 Table A: Pay gap rankings of Asia-Pacific economies The widening pay gap is also indicative of the wide divide in skills and capabilities between senior executives and clerical employees. However, the shortage of skilled labour and junior staff in Australia, Malaysia, New Zealand, Singapore and Vietnam is reflected by the gap either narrowing or stabilizing in the past two years. An analysis of s PayNet shows a correlation between pay gap and the education/ skills level of the country s workforce the larger the population of welleducated and highly trained workforce, the small the pay disparity. Taking the example of www.haygroup.com/sg 2

Singapore, while salaries tend to start low, employees are able to enjoy up to 24% salary increase within the first two years due to high productivity and good performance, said Charlotte Park of Asia. Economic globalization will continue to put competitive pressures on companies and governments to come up with the right mix of talent and compensation policy for the entire workforce spectrum. Companies will continually need to review their strategic choices in which geographies, which part of their businesses to best spend their wage budget versus the skills and capabilities available. Pay gap widens for US workers Research released today from global management consultancy shows that the gap between the salaries of managers and clerical workers in the US has increased by almost 20% - making it the third fastest growing pay gap in the world. The pay gap in the US and Western Europe is relatively small compared to the rest of the world, with all of these more established, slower growth economies appearing in the bottom third of the pay gap rankings. Western European pay gaps are relatively stable, with less than 5% change year-on-year. However, the US has moved up the rankings from 50 th in 2006 to 43 rd place in 2007, representing an 18.4% increase. The market for management talent in the US is as hot as in the rest of the world, said Tom McMullen of US. Positions at this level are one step away from the executive suite, and companies are looking to fill them with high-calibre candidates who they can then progress into more senior roles. Typically these roles would be held by experienced and professionally qualified employees and there just aren t enough of those candidates to meet demand. www.haygroup.com/sg 3

However, if US recessionary fears are realised, we may well see the gap stabilize or even decrease. Our experience is that it s this level that gets hardest hit in recessionary markets, as companies reduce staff and curtail hiring plans, reducing competition for these candidates. At the same time, clerical level roles tend to continue to increase at a steady rate, in line with cost of living. East vs West the picture in Europe Europe is a microcosm of the disparity between the established and growing economies, with stark contrasts between Eastern and Western Europe. The lower ranks of the table are heavily populated with Western European countries; their well-established economies and slower growth suppress the stakes for talent supply and demand, which, in turn, translates into a smaller pay gap. At the other end of the scale, three of the top ten countries with the most significantly large pay gaps are from Eastern Europe (Romania, Poland and Russia), and all of the central and Eastern European countries surveyed (apart from Estonia which is ranked 35) appear in the top half of the table. The year-on-year analysis shows that this picture is relatively stable. The global talent shortage, combined with the continued growth of the Central and Eastern European economies, is creating a climate where companies must pay a premium to secure senior talent, said Scott Marlowe of Czech Republic. The recent economic gains in Eastern Europe may have lifted pay at the lower levels of the workforce, but the increases at management level have more than compensated, keeping the pay differential constant. Middle East and North Africa Egypt comes in at 13 th place, streets ahead of the more developed countries in the areas like Saudi Arabia and UAE, which sit squarely in the middle of the range. www.haygroup.com/sg 4

Vijay Gandhi from UAE commented: Most of the more developed countries in the Middle East like Saudi Arabia and UAE are heavily dependent on an expatriate workforce. This reduces the likelihood of a big wage gap, as employees at all levels are unlikely to leave their home country to work in Middle East for a compromising wage. However, in Egypt the workforce is largely made up of Egyptian nationals, and suffers from the same shortage of management talent as many other economies. In addition, government sector reforms in Egypt have increased the demand for managerial level jobs as they are now targeting the limited private sector talent pool. This explains why Egypt s pay gap is one of the largest in the world. -ooo- How the findings were calculated For each country, we took the market median base salary for a Clerical level worker ( Reference level 12, or 208 Points), and for a Management level worker ( Reference level 20, or 805 Points). We then divided one by the other, to give us the pay gap i.e. how much more does a management worker earn, compared to a clerical worker. About 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 88 offices in 47 countries, we work with over 7,000 clients across the world. Our clients are from the public and private sector, across every major industry, and represent diverse business challenges. Our focus is on making change happen and helping organisations realise their potential. For more information, please visit www.haygroup.com/sg or contact: Michelle Low Regional Marketing Manager E michelle_low@haygroup.com M +65 9683 2856 T + 65 6323 1668 www.haygroup.com/sg 5

Table 1 pay gaps 2006 and 2007 Ranking Country 2006 gap Country 2007 gap 1 Vietnam 11.7 China 11.8 2 Thailand 10.6 Thailand 10.7 3 China 10.5 Vietnam 9.8 4 Ukraine 10.0 Romania 9.8 5 Dominican Republic 9.8 El Salvador 9.6 6 Russia 9.1 Guatemala 9.4 7 Costa Rica 9.0 Dominican Republic 9.1 8 Poland 8.9 Indonesia 9.1 9 El Salvador 8.8 Poland 9.1 10 Romania 8.8 Russia 8.7 11 Indonesia 8.7 Costa Rica 8.6 12 Peru 8.3 Peru 8.0 13 Guatemala 7.8 Egypt 7.9 14 Egypt 7.6 India 7.7 15 Chile 7.5 Chile 7.3 16 India 7.4 Venezuela 7.3 17 Bulgaria 7.3 Brazil 7.3 18 Mexico 7.1 Turkey 7.1 19 Brazil 7.0 Lithuania 7.0 20 Lithuania 6.9 Ukraine 6.8 21 Turkey 6.9 Mexico 6.4 22 Venezuela 6.6 Colombia 6.3 23 Colombia 6.2 Bulgaria 6.3 24 Hungary 6.1 Hungary 6.2 25 Taiwan 6.1 Malaysia 6.0 26 Malaysia 6.0 Czech Republic 5.8 27 Estonia 5.8 Hong Kong 5.8 28 Argentina 5.7 Argentina 5.6 29 Czech Republic 5.6 Slovakia 5.6 30 Hong Kong 5.5 Latvia 5.4 31 Latvia 5.4 Saudi Arabia 5.3 32 United Arab Emirates 5.2 United Arab Emirates 5.2 33 Saudi Arabia 5.1 Oman 4.9 34 Singapore 4.9 Taiwan 4.9 35 Oman 4.8 Estonia 4.7 36 Slovakia 4.8 Singapore 4.7 37 South Africa 4.5 Greece 4.6 38 Portugal 4.4 South Africa 4.4 39 Greece 4.4 Portugal 4.4 40 Botswana 4.0 Botswana 3.9 41 Spain 3.8 Spain 3.8 42 Italy 3.6 South Korea 3.7 43 Austria 3.5 United States of America 3.7 www.haygroup.com/sg 6

44 France 3.4 Italy 3.6 45 Japan 3.3 France 3.5 46 Ireland 3.2 Austria 3.3 47 Luxembourg 3.2 Luxembourg 3.3 48 Australia 3.2 New Zealand 3.3 49 New Zealand 3.1 Ireland 3.2 50 United States 3.1 Japan 3.2 51 South Korea 3.1 Australia 3.2 52 United Kingdom 3.1 United Kingdom 3.1 53 Netherlands 3.0 Netherlands 2.9 54 Belgium 2.9 Belgium 2.8 55 Sweden 2.8 Sweden 2.8 56 Finland 2.8 Germany 2.8 57 Germany 2.7 Finland 2.7 58 Switzerland 2.7 Denmark 2.7 59 Canada 2.5 Switzerland 2.6 60 Denmark 2.5 Canada 2.6 61 Norway 2.3 Norway 2.3 Source: PayNet www.haygroup.com/sg 7

Table 2 ranking by year-on-year % change Country 2006 2007 Change % change Ukraine 10.0 6.8-3.11-31.3% Taiwan 6.1 4.9-1.23-20.1% Estonia 5.8 4.7-1.05-18.1% Vietnam 11.7 9.8-1.89-16.2% Bulgaria 7.3 6.3-1.00-13.7% Mexico 7.1 6.4-0.66-9.3% Dominican Republic 9.8 9.1-0.65-6.6% Singapore 4.9 4.7-0.25-5.1% Costa Rica 9.0 8.6-0.42-4.6% Peru 8.3 8.0-0.36-4.3% Russia 9.1 8.7-0.37-4.1% Austria 3.5 3.3-0.12-3.5% Japan 3.3 3.2-0.09-2.6% Netherlands 3.0 2.9-0.08-2.6% Switzerland 2.7 2.6-0.07-2.5% Finland 2.8 2.7-0.05-1.8% South Africa 4.5 4.4-0.07-1.6% Chile 7.5 7.3-0.12-1.6% Sweden 2.8 2.8-0.04-1.5% Malaysia 6.0 6.0-0.09-1.4% Portugal 4.4 4.4-0.06-1.4% Norway 2.3 2.3-0.03-1.2% United Arab Emirates 5.2 5.2-0.06-1.1% Belgium 2.9 2.8-0.02-0.7% Australia 3.2 3.2-0.02-0.6% Spain 3.8 3.8-0.02-0.6% Argentina 5.7 5.6-0.03-0.5% Italy 3.6 3.6-0.02-0.5% Latvia 5.4 5.4 0.00 0.0% Ireland 3.2 3.2 0.01 0.2% Lithuania 6.9 7.0 0.03 0.4% Hungary 6.1 6.2 0.07 1.1% Thailand 10.6 10.7 0.15 1.4% United Kingdom 3.1 3.1 0.05 1.6% Germany 2.7 2.8 0.05 1.9% Oman 4.8 4.9 0.10 2.1% Turkey 6.9 7.1 0.16 2.3% Luxembourg 3.2 3.3 0.08 2.6% Poland 8.9 9.1 0.24 2.7% Colombia 6.2 6.3 0.17 2.7% www.haygroup.com/sg 8

Canada 2.5 2.6 0.07 2.8% Czech Republic 5.6 5.8 0.17 2.9% France 3.4 3.5 0.11 3.3% Saudi Arabia 5.1 5.3 0.21 4.1% Hong Kong 5.5 5.8 0.23 4.2% Brazil 7.0 7.3 0.29 4.2% India 7.4 7.7 0.32 4.3% New Zealand 3.1 3.3 0.14 4.4% Botswana 4.0 4.2 0.18 4.5% Egypt 7.6 7.9 0.34 4.6% Indonesia 8.7 9.1 0.40 4.6% Greece 4.4 4.6 0.28 6.4% Denmark 2.5 2.7 0.20 8.0% El Salvador 8.8 9.6 0.82 9.3% Venezuela 6.6 7.3 0.75 11.4% Romania 8.8 9.8 1.04 11.8% China 10.5 11.8 1.25 11.9% Slovakia 4.8 5.6 0.83 17.5% United States 3.1 3.7 0.57 18.4% South Korea 3.1 3.7 0.61 19.8% Guatemala 7.8 9.4 1.66 21.4% www.haygroup.com/sg 9