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As markets within Asia Pacific continue to develop, it is no surprise that senior executive base salaries in these markets are getting close to, or even exceeding, those in the United States.
However, according to Willis Towers Watson’s 2016/2017 Global 50 Remuneration Planning Report, the salary gap between top management and junior staff are also widening in Asia.
The report found that in 2016, nine out of the 15 APAC markets surveyed saw the salary gap widen from 2015. These nine markets were China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea and Thailand; with the largest salary gap being in Indonesia.
In Indonesia, top management earn around US$190,000 a year, 15.8 times that of professional-level staff who earned about US$12,000. The differential there widened from 12 times in 2015 and 11.8 times in 2014.
Coming in a close second was Thailand where top management earn about US$202,000 a year, 14.9 times that of professional-level staff (US$13,600), significantly wider than the 8.7 times in 2015 – the biggest year-on-year jump in salary gap seen in Asia last year. Similarly, Vietnam also saw a salary gap of 14.9 times in 2016.
In Singapore, the change was minimal, rising from 6.3 times in 2015 to 6.5 times last year. While in Hong Kong, the gap rose from 6.2 to 7.5 times.
Elsewhere in the region, the salary divide in China rose from 9.7 times in 2015 to 10 times in 2016. Although China saw the gap widen between 2015 and 2016, base salaries for top management and professional-level staff actually grew at similar speeds, by 18% and 16%, respectively.
“Income gap is something that both governments and institutions like the WEF look to address to ensure that ordinary people on the street can tangibly benefit from economic growth to ensure sustainable globalisation,” said Sambhav Rakyan, data services practice leader, Asia Pacific at Willis Towers Watson.
“For businesses, it’s essential to have a strategy that addresses this issue. That includes having a clear career path and objectives for junior staff so they can feel confident about their future and understand their targets. It is especially important for listed companies if their business performance isn’t good enough, because they can easily become targets of shareholder activists when bloated CEO pay packages fail to produce better outcomes.”
Apart from the widening pay gap, the survey also found that in countries like Singapore and Hong Kong, total guaranteed cash (base salaries plus total fixed allowances) last year were more than 25% higher than the average US$233,000 earned in the United States.
In 2016, for every US$100 that top management in the United States earned in base salary, their peers in Singapore and Hong Kong made US$132 and US$128, respectively.
On the same basis, top management in China (US$98), Thailand (US$87), Indonesia (US$82) and South Korea (US$82) also earned similar total guaranteed cash to their counterparts in the United States. However, the report noted that many top executives in the United States receive short- and/or long-term incentives, so their overall compensation is normally higher than their peers in Asia.
While top executives in many Asian markets earned salaries close to or above those in the United States, at lower levels in the corporate hierarchy was a different story.
For every US$100 that professional-level staff earned in the United States, their peers in China (US$35), Thailand (US$21) and Indonesia (US$18) made just a fraction. Noteworthy too is in India, where the figure was just US$15.
Meanwhile, the difference was less pronounced in Japan (US$70) and South Korea (US$63), but still very discernible.
Note: for this survey, professional-level refers to a grouping that includes supervisory positions and junior managers, with skills and responsibilities covering areas such as accounting, computing, marketing, engineering and personnel.
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