30 years on, a management salary buys less beer

Jul 28 2004 by Brian Amble Print This Article

The average income for managers is now more than ten time higher than it was in 1974 (£42,050 compared to £4,067), according to the latest National Management Salary Survey of almost 22,000 managers.

The survey, carried out by the Chartered Management Institute (CMI) and Remuneration Economics, has been analysing salary and benefits trends for thirty years and highlights the huge changes to lifestyles, career patterns and employee reward schemes that have taken place since 1974.

One of the most notable trends of the past thirty years has been increasing career mobility and a corresponding decrease in organisational loyalty.

Thirty years ago, more than a third (36 per cent) of senior management had been with the same company for 20 years or more. But this yearís survey found that more than one in ten chief executives (12.9 per cent) changed employer in the last year alone.

Rather closer to the heart of the average manager is the fact that the ten-fold increase in average salaries still failed to keep pace with spending on essentials such as housing, or consumables such as beer, fuelling high levels of borrowing and household debt.

Thirty years ago the average UK house cost £9,900 against £162,000 today Ė thatís an increase of more than 1600 per cent - while a pint of beer could be bought for less than seven per cent of today's average price (17 pence against £2.50).

At the same time, the nature of the benefit packages employers offer their staff has also seen major changes.

Back in 1974, nearly nine out of ten directors had sole use of company cars, compared to only two-thirds per cent today. At managerial level these figures have fallen from almost three-quarters to less than half (44 per cent) as tax changes have made company cars less attractive.

Yet other benefits are now far more common components of total remuneration packages. In June 1974 private medical insurance was offered by fewer than half (47 per cent) of firms and share option schemes by fewer than a quarter (22 per cent). In contrast, some seven out of ten now offer medical insurance and half offer share options, while company pensions schemes are almost universal (96.7 per cent).

But fewer than a quarter (23 per cent) of organisations questioned for the survey say that they provide flexible benefits as part of their remuneration packages. Of those that do so, more than eight out of ten offer cash as an alternative to standard benefits such as pension contributions, life assurance and annual leave.

The survey also found that while things have improved for parents, there is still some way to go. Thirty years ago help for parents was almost non-existent. Now, one in five employers now offers some form of provision for childcare. But four out of ten employers still offer parents no flexible working options at all.

Remuneration Economicsí Paul Campfield said: "In 30 years of reporting, this research has created a valuable picture of management progress. It is encouraging to see that organisations are increasingly offering more flexible working patterns as one of the practices to retain key managers."