Latest research from global management consultancy Hay Group reveals that since 2008 the pay gap between lower level employees and senior managers has widened in every region across the world.
The pay gap between lower level workers (comprising skilled manual, clerical, supervisor or graduate entry jobs) and senior managers (heads of departments or equivalent) is now on the rise in as twice as many countries as it is falling (42 to 21).
- Europe has experienced the smallest increase at 2.2%
- In contrast North America has seen a 7.2% rise
Ben Frost, consultant at Hay Group, comments: “The job level pay gap has accelerated since the recession. However it is not purely a post-recession issue. This is a trend that has been building for the past 30 years through economic boom as well as bust.”
Trends driving the pay gap
Ben Frost continues: “Frequently discussed but often misinterpreted, the size of the pay gap can depend upon a number of factors, not least the shape of the company and the types of workers it employs.
Not forgetting these nuances, the pay gap has accelerated as globalisation opened up workforces and lower level jobs are increasingly automated and off-shored. This reduces the number of jobs available and increases competition for those left, keeping pay down.
In contrast, pay is going up for senior managers where skills such as emotional intelligence, creative thinking and advanced judgement are in high demand and short supply. In addition, senior managers are increasingly being asked to take on more responsibilities and more complex work.
Ben Frost continues: “The potential for a large job pay gap to cause discontent among the workforce is huge. Organisations need to be transparent with employees and communicate why reward policies are in place.
“They should also invest in their training and development programmes to upskill their workforces to meet the future demands of their businesses. Done properly, these solutions present an opportunity for organisations to navigate the pay gap and improve employee engagement.”
Regional variations: limited increases in Europe but a larger pay gap in North America
Europe has seen the smallest change globally, with an average increase in the pay gap of only 2.2% since 2008. It is also the region with the greatest number of countries that have experienced a decrease in the pay gap, with Switzerland, France and Poland recording decreases of 3.3%, 5.6%, and 12.8% respectively.
In comparison to Europe, North America has experienced a 7.2% increase in senior manager pay compared to lower level employees. The United States alone has seen a 10.6% increase.
Ben Frost explains: “Despite an average global increase in the job level pay gap, Europe and America have diverged in part due to local employment practices. In response to the recession, many companies in Europe introduced communal pay cuts to avoid job losses.
“In comparison, U.S. companies more frequently cut jobs and asked the remaining senior managers to expand their scope of work during the recession. Many of those who remained employed received a pay increase as compensation for their expanded role, leading in part to the widening job level pay gap.”
this study should be credited to ‘global management consultancy, Hay Group’, and not ‘Hay’ or ‘Hays’, which are separate and unrelated organisations.
For further information
For further information on this story or to interview Ben Frost please contact James Boyd-Wallis or Rene Musech on 0207 592 1200 or email@example.com
You can also read Hay Group’s latest issue of IMPACT ‘What you’re not being told about the pay gap’.
Notes to Editors
About the study
The data was drawn from Hay Group PayNet which contains data for more than 16 million job holders in 24,000 organizations across more than 110 countries.
It shows the average difference in pay between lower level employees in an organisation and senior managers by country for 2008, 2011 and 2014. It also shows the change in the average percentage difference from the start of the recession in 2008 to2014. The difference in pay number is calculated as senior manager pay as a multiple of lower level pay i.e in Egypt in 2008, a senior manager was paid 7.9 times what a lower level worker was paid. All pay data is before tax.
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