ECA's National Salary Comparison is a unique guide to the difference in local pay levels between countries and enables companies to see at a glance whether an individual's spending power would be protected if they were moved to work in another country and paid a local salary to do a similar job.In a globalised business environment, companies are under pressure to stay competitive in a host of different markets at the same time. As mobile workforces become increasingly diverse in terms of the nationalities and levels of seniority involved it is not surprising that ECA research shows an increasing trend towards using more than one approach to calculating appropriate compensation packages. At the same time there is a need to achieve equity among multinational workforces in the most cost-effective way, whether that means equity with an employee's colleagues at home, their peers in the country where they are on assignment or other expatriates.
Choosing a competitive and equitable remuneration approach
While a local salary approach ensures equity among local peers in the host country, it may not always provide sufficient incentive for an employee to take up a posting to a different country.
Simple comparisons of gross salaries can be very misleading - what may look like a pay rise might not make the employee better off depending on how far that salary stretches in the host location once factors such as tax, social security and cost of living are taken into account.
"In an environment of intense competition for suitably skilled staff, companies need to have all the information to hand to determine the most suitable pay approach for their international assignee workforce," said Steven Kilfedder, Cost of Living and Remuneration Services Manager, ECA International. "This includes being able to compare spending power to assess whether transferring their employees on local terms will provide sufficient remuneration in the new location, or whether additional allowances or an alternative method of salary calculation is necessary."
Relative buying power varies significantly by seniority
The report also reveals how relative wealth comparisons can change from country to country according to seniority. While European countries dominate at the lower end of the management scale in terms of purchasing power, at the higher end a shortage of suitably qualified staff has contributed to
pushing up salaries for senior employees in many less developed nations. Four of the countries with the highest buying power at executive level are in South or Central America: Mexico, Chile, Colombia and Brazil. Of these, only Chile features in the top ten when the buying power of junior managers is compared.
Balancing an attractive salary with a workable policy
Another issue highlighted in the report is the need for companies to bear in mind future scenarios such as repatriation or consecutive assignments when choosing their salary approach.
For example, middle managers in Hong Kong and Singapore command significantly larger salaries than their contemporaries in many other Asian countries and enjoy considerably higher buying power. An assignment from either of these countries to elsewhere in the region on a local salary basis is unlikely to be considered competitive unless additional benefits are provided on top. However, moves in the reverse direction on local terms could be so attractive that the company will have trouble motivating their assignee to return to their home location - should that be the aim of their global mobility policy.
Companies also need to be aware that the reward landscape is constantly changing. Currently, salaries in many developing countries such as China are increasing at a faster rate those in Europe and the US, for example. Up-to-the-minute intelligence on the evolving situation equips companies with the tools they need to stay competitive and keep abreast of the implications for global mobility. To find out more, download ECA's free National Salary Comparison report here: http://www.eca-international.com/resources/white_papers
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About ECA International's National Salary Comparison research
Survey results in the report have been calculated on a euro base, i.e. all salaries have been converted to euros and all cost of living indices have been stated relative to the cost of the shopping basket in Belgium. All local salary data has been provided by Towers Watson, an independent research company. Re-basing the data to different country bases will change the outcomes, as does looking at different levels of seniority. ECA is able to compile the information using any country featured in this report as a base for ease of use.
About ECA International (www.eca-international.com)
ECA International is the world's leader in the development and provision of solutions for the management and assignment of employees around the world. Delivering data, expertise, systems and support in formats which suit its clients, ECA's offer includes a complete 'out-source' package of calculations, advice and services for companies with little international assignment management experience or resource; subscriptions to comprehensive online information and software systems for companies with larger requirements; and custom policy and system development projects for companies who manage thousands of international assignees around the world.
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