Managerial pay rises in emerging economies to outstrip West this year

Mar 13 2007 by Nic Paton Print This Article

Managers in China, India and Eastern Europe will see their pay rising far faster than their counterparts in the West this year, as the booming growth seen over the past few years starts to feed into individual pay packets.

Research by management consultancy Hay Group has suggested that administrative, professional and senior managers in those three countries will top the global pay rise ladder this year.

By comparison, real pay rises for workers in the West are expected to fall below average.

The impressive economic acceleration witnessed in India and China will start to have a dramatic impact on pay packets, the Hay study has suggested.

In China administrative workers are predicted to get a 7.9% rise, professionals 7.8% and senior management will do particularly well on 8.9%.

"The wealth created by rapid, focused economic development is resulting in a pay boom for Chinese workers, who will enjoy some of the largest real pay rises on offer worldwide in 2007," said Hern Yin Goh, manager of Hay Group Reward Information Services in Shanghai.

In India the extremely high pay rises seen last year 7.2% across the board look set to continue into 2007, said Hay.

The country boasts the second highest pay increase predictions for 2007, with hefty salary increases of 6.2% forecast across all the three job levels.

Senior managers could anticipate a real rise of 6.9%, with professionals and administrators getting 5.9% each, it forecast.

And in Eastern Europe, real pay will accelerate at a rate far above that in the West, it said.

Bulgaria would see the highest average pay increases in Europe across the three categories, at more than 6%.

However, the country also had the biggest gap between senior management and administrative workers.

While senior managers in Bulgaria could expect a 7.8% rise administrative workers would have to make do with 4.3%, it said.

Slovakia and Lithuania were forecast healthy pay increases and more consistent increases across the board, with both countries featuring in the top five for all levels.

Wages in Romania were also buoyant, with salaries predicted to increase by 3.1% on average across the three job levels.

"Growing pay packets in Eastern Europe reflect continued economic development in the region," said Scott Marlowe, general manager, Hay Group Czech Republic.

"While wages are growing from a much lower level for manual and administrative workers, pay levels for managers are closer to Western standards," he added.

"The lower cost of living in the East means that as the management pay gap closes, senior managers in Eastern Europe enjoy a significantly greater purchasing power than those in the West, ultimately making them better off," he concluded.

By contrast, salary increases in the West would be much more moderate in 2007, said Hay.

Workers in the major continental economies Germany, Italy, Spain and France faced predicted increases of below 1.5% across all job three categories, the only exception being Italian senior management, who would enjoy an increase of 2.3%.

Administrative staff in Italy, for example, would receive a meagre 0.5% real pay increase, said Hay.

British workers could expect only a 1.5% real increase across the board, with real wage rises highest for professionals (1.7%).

Senior managers would receive increases of 1.5%, administrative staff just 1.2%, it forecast.

And US workers would fare even worse, with predicted increases of just 1.4% across all three categories, said Hay.

"Much like their colleagues in Europe, American employees cannot look forward to stellar pay rises in 2007," said Iain Fitzpatrick, manager of Hay Group Reward Information Services US.

"As another established market, the USA is experiencing much slower growth rates than some of the exciting new economies, which in turn is reflected in slower salary growth rates," he added.