Asian executives earn more than Western peers: Mercer

Thursday, 13 October 2011 00:00 -     - {{hitsCtrl.values.hits}}

NEW DELHI: Asian executives are taking home fatter pay-cheques than their peers in Europe and by 2013, they will go past the earnings of American top brass as well, says global staffing consultancy Mercer.

Executive pay in the Asia Pacific region is increasing across the region, especially in China, India, Indonesia, Vietnam, the Philippines and Malaysia.

On India, Mercer said that the country’s strong economic growth has led to greater workforce mobility, but added that salary increases have not matched performance.

It said, “Strong growth of around 9 per cent (in India) has increased staff mobility and pay. As increases in pay have not always been matched by improved performance, greater scrutiny by boards and compensation committees on fair use of remuneration benchmarks, increased use of performance criteria and more clawback provisions, is likely.”  

In 2011, average executive salaries in Asia increased by an average of 7 per cent, while the vast majority of European organisations are increasing their executive salaries by an average of 2.5 per cent in 2011.

In the US and Canada pay inflation is restrained with 2011 salary increases averaging around 3 per cent, while, in the Gulf Cooperation Council, base salary increases in 2011 range from 6 to 7.5 per cent. For many companies, this will be the first pay increase in two years.

Salary hikes in the West are being restrained owing to poor economic growth and continued pay scrutiny in light of the current Euro-zone, banking and debt crisis, Mercer says in its Global Executive Pay Trends report.

“Historically, executives in western economies have been paid the most but the centre of gravity is moving inexorably East. In 2010, average executive salaries in Asia surpassed those in Europe and we anticipate that they will surpass those in the US by 2013,” Mercer’s Asia Pacific leader for Rewards, Human Capital Hans Kothuis said.

The main driver behind this spurt in Asian executive salaries include increased pay restraint in Western Europe and North America, combined with economic growth in emerging markets, accelerating inflation and, crucially, a scarcity of executive talent.  Mercer has however, cautioned that inflationary drivers behind remuneration in Asia risk creating a “bubble, fraying the link between pay and performance and distorting company salary structures”.

“Companies in the Asia should review their remuneration policies to ensure that they can maintain sustainability and capitalise on rapid changes in technology, trade and financial conditions, as their share of the world economy increases,” Kothuis said.