Philadelphia, PA — May 07 2008, Research released today from global management consultancy Hay Group shows that the gap between the salaries of managers and clerical workers in the US has increased by almost 20% over the past year - making it the third fastest growing pay gap in the world.
The finding comes from a new report based on Hay Group’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.
US pay gap increasing – but trend may not continue
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 50th in 2006 to 43rd 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 Hay Group 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.”
“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.”
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).
Gavin Brown of Hay Group UK said: “The findings reflect the increasing globalisation of the market for senior specialist talent, which dictates that even companies in developing countries need to pay an ‘international’ rate to attract management-level top talent.
“Clerical level workers, however, are immune to the global talent market, are less likely to be internationally mobile, and tend to be paid more in line with the cost of living. Where the cost of living is especially low, as it is within emerging and developing economies, the difference between the cost of living and ‘international’ pay is large – reflected in an exaggerated pay gap.”
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Notes for editors
How the findings were calculated. For each country, we took the market median base salary for a “Clerical” level worker (Hay Group Reference level 12, or 208 Hay Group Points), and for a “Management” level worker (Hay Group Reference level 20, or 805 Hay Group 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 Hay Group
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 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, or to arrange for an interview with one of our consultants, please contact Yael Hartmann at 212.584.5480 or at yael@blisspr.com.
