Are You Getting Enough?

We may moan that our salary doesn’t reflect our status, but how do our foreign counterparts fare? Do they get more money, or more free time? And are they any happier? Andrew Saunders peers into the world’s pay packets

For most of us, there is only one answer to the question ‘Are you getting paid enough?’ and it’s rarely in the affirmative. Even the current slowdown, which threatens to make the world economic climate cooler than an Arctic penguin’s backside, is not enough to stop the average wage slave from chasing a bigger slice of cake.

Even our own prime minister wanted more. His recent £50,000 pay hike marked a dramatic end to four years of fiscal abstinence, an admission that Government attempts to set UK plc a good example of pay restraint have been abandoned. When it comes to salary negotiations, it seems that the famous British stoic reserve has been replaced by something more grasping.

In recognition of that fact, we decided it was time for another MT global salary survey. This is our attempt to assess objectively the value of what people do, where they do it and whether they would be better off doing it somewhere else. We’ve also tried to answer some of the broader questions about quality of life, looking at the trade-off between money and standard of living.

Starting at home, the first MT survey, published in April 1999, revealed that Napoleon’s famous verdict on us as ‘A nation of shopkeepers’ could do with updating. Judging by our pay packets, we’d become a nation of accountants. Two and a bit years on, we’re still valuing that profession more highly than any other developed nation. Qualified accountants with five years in the business earn about £76,000 a year in the UK, a whopping 55% more than their closest rivals, now just a train ride away in France.

These grey-suits may have been hard at work, but – appropriately enough for a country that favours those who count the beans over and above the people who design, make or market things in the first place – we now have the lowest-paid manufacturing employees as well. They may be skilled, but at £20,475 their earnings are below the national average wage for all full-time workers. The cost of firing someone is less here than anywhere else, too. With British manufacturing output continuing to fall, it must be cold comfort to the workers in troubled mobile phone and microchip factories across the land that the bullet with their name on it is the cheapest one in the world. To cap it all, the high price of British beer will soon eat into the meagre pay-offs of those who seek to drown their sorrows.

But it’s not all doom and gloom in Blighty, especially if you are the boss. Our CEOs’ salaries outstrip those of every other European country by more than £100,000, and their remuneration packages have increased in value by 29% since our last survey. And the bigger you are, the better it gets – John Sunderland of Cadbury Schweppes and John Lomax of Misys were among the lucky band of top Brits to trouser more than £2.5 million last year.

On the other side of the world, big Aussie earners can now afford to throw plenty of prawns on the barbie. They have beaten the French to third place at the top table, thanks to an eye-popping 73% rise over the past two and a bit years. And there are glad tidings for the Swedes too, who are probably still weeping into their soused herring after a dismal performance in our last round-up. Their CEOs, accountants, manufacturing workers and IT and marketing personnel all came at, or near the foot of, every MT list in 1999. But in 2001, Swedish heavy hitters are no longer at the bottom of the pile and now earn a modest but significant £13,000 more than those surprise laggards, the Germans. Top salaries in the Federal Republic, traditionally the economic powerhouse of Europe, have risen by a modest 22%, although the weakness of the euro against the pound will have depressed this result.

Two years ago, the jury was out on whether there really was a worldwide market for business talent. Despite the much-used buzzword ‘globalisation’, the number of companies actually headed by a non-native was pretty small. Now we have a few more – Luc Vandevelde in charge of ailing but still oh-so-British Marks & Spencer, Welshman Lindsay Owen-Jones at French cosmetics giant L’Oréal. More significantly, after years of our utilities and technology businesses being plundered by French and German corporate raiders, the Brits are biting back. Vodafone’s takeover of Mannesmann takes Chris Gent and his cohorts right into the once-sacrosanct heart of Deutschland AG.

Tony Goodwin of pan-European recruitment company Antal International sees this as part of an adjustment in attitudes towards working abroad and exploiting foreign talent. ‘Working abroad used to be seen as career-limiting,’ he says. (Goodwin founded his business in Hungary in 1994 and now lists Coca-Cola, Nokia, IBM and Dell among his clients.) Returning expats would receive long sideways glances from potential employers back home, suspicious of their globetrotting past, he recalls. ‘But that’s changing. In 10 years’ time you won’t be able to get on the board of a FTSE company without having spent time overseas.’

Such a philosophy might have spared some blushes at McDonald’s earlier this year, when its Indian offshoot received an international flame-grilling for inadvertently selling fries treated with animal products to the nation’s devoutly vegetarian Hindus.

If you really want to see megabuck salaries, there’s only one place to go – the US, home to the biggest cheeses of all. The pay package of the average American CEO, replete with share options and bonuses, is now worth very close to the magic £1million a year. Even more striking is the fact that, tech boom fallout notwithstanding, the gap between Old Glory and the rest of the world is still growing. In 1999, the captains of US industry earned about two-thirds more than their nearest rivals. Now it is 95%.

But before you start planning your move stateside, beware. There are signs that American business’ love affair with some of its most outrageously well-paid figureheads is cooling. The discontented grumblings of investors have been getting louder, and Fortune magazine recently ran a damning indictment of salary inflation under the headline ‘The Great CEO Pay Heist’.

It’s not hard to see why. Celebrity bosses such as Disney’s Michael Eisner and Steve Jobs of Apple Computer Inc each earn enough to run a small country. Eisner – the fat cat who runs the mouse factory – was for some years the best-paid boss in the world, but his $194 million salary-plus-bonus now puts him back in joint third place. Even Jobs’ $381million is only enough for the number two spot on salary alone, but he probably finds consolation in his record-breaking $872 million options deal. If the Dow keeps heading south, however, those options will soon look more like a lead balloon than a golden egg.

Spare a thought for the struggling Japanese economy. For so long a byword for international corporate success, the land of the rising sun has been stuck in its worst recession since the war. Our survey hints at the reason why – it is woefully lacking in the spirit of enterprise. Only 1.3% of the population is involved in entrepreneurial business, the vital bedrock of the capitalist machine, compared with 12.6% in the US and 11.9% in Australia. As a nation, the Japanese may be great at taking other people’s ideas and making money from them, but it looks as though they don’t have enough of their own to keep things moving. On the other hand, those who bemoan the increasing distance between the boardroom and the shop floor in the West will be happy to see that Japan’s blue-collar workers are still the best paid in the world. Their £36,779 salary has risen 44% since the last MT survey. Japanese bosses still earn a relatively modest 10 times more than those on the shop floor.
A final development that promises to make a big impression on the way we do business in future has come from a region that until recently wasn’t even a blip on the economic radar – eastern Europe. Instant communication via the internet and the increasingly deregulated labour market have opened up countries such as Hungary and even Russia to Western business eager to set up shop there. And when you compare the relative employment costs it’s not hard to see why. A personnel manager who would cost you £45,000 in the West can be had for as little as £11,000 in Poland or Hungary. A Czech IT network analyst will happily sign up for about two-thirds of the £38,000 commanded by his western equivalent. And these are good, well-trained people. So look to your laurels, accountants. There could be a pack of well-qualified Slovenian number-crunchers heading this way, ready to do a month’s work for less than you spent at Harvey Nicks last week.

Management Today August 2001