Paying for skill

Salary trends in Africa and the Middle East are largely
influenced by the need to attract or retain people with the required skills,
says Alan Hosking


Salary increases granted to business executives around the
world always beat inflation, says Jim Steer, director at Deloitte & Touche
Human Capital Corporation (HCC). He made this comment after extracting the
figures relating to executive pay increases from HCC’s international associate
Watson Wyatt’s latest Global Executive Remuneration Survey, which examined
executive pay in 50 different countries.


Steer says this is as true in developed countries with
booming economies and low or even negative rates of inflation as it is in
African or Middle East countries with contracting economies or high levels of
inflation. And he believes that executive remuneration trends have as much to
do with improvements in productivity and perceived price increases as they do
with a global shortage of talented executives.


"Thanks to technology, executive skills are readily
transportable over geographic borders. If executives in one country feel that
their standard of living is being compromised by high inflation, it is
relatively simple for them to emigrate," he says.


Steer concedes that in countries with a more chronic skills
shortage, there is more pressure on companies to find ways to reward executive
loyalty, although he is quick to point out that remuneration is only one factor
in retaining managerial talent. There are a number of other factors outside the
control of business that can prompt the emigration of skills. In South Africa,
for example, emigration of skilled individuals is exacerbated by factors such
as the crime rate in the country.


While Africa and the Middle East differ dramatically in many
ways, they share a number of similarities. With the exception of a few
countries, both regions are known for ongoing conflicts or a serious risk of
future conflict. This makes a huge difference to their attractiveness as a
place of work for foreign nationals, a factor which further adds to the
affected countries’ woes, as many of them are very dependent on foreign skills.
The political and/or economic uncertainty of many African and Middle East
countries therefore plays a large role in the amounts and the manner in which
people are paid to work in such countries.


Because IT skills continue to be in short supply throughout
Africa, the pay packages required to attract these skills have to be big enough
for an IT specialist to earn substantially more than he or she could earn in a
developed country. Smaller, local companies are therefore not usually in a
position to employ these people. They are usually employed by the large
multinationals who have a presence at local level and who are able to pay the
salaries and benefits that make living and working in the particular country
worthwhile, for a period, at least.


In the Middle East, which dominates the export of world
energy, the average per capita income is just above US$2,000 compared with
about US$24,000 for high-income states. Yet foreign nationals working in the
Middle East and Africa expect to be paid the same salary packages they receive
in their home countries, and then a good deal extra for the inconvenience (and
danger, in many cases) they may have to face.


Ian Holmes, HR director of Johannesburg-based construction
company Murray and Roberts Contractors International, which has construction
projects in Africa and the Middle East, says when it comes to pay, companies
get what they pay for. He points out that expats in Dubai, for example, are
paid at three very distinct levels.


"The highest-paid are the experts from Europe, who are
currently pricing themselves out of the range. Below them come the South
Africans, who are prepared to work for far less money than the British and are
still sought after in upper management." The third level, says Holmes, includes
largely Asian nationals. "The Koreans in Dubai are undercutting almost
everyone else, while the expats from India are prepared to work for just about
anything. You can get a quantity surveyor from India for US$4,000 or even less,
but the onus is on the employer to ensure that the person is qualified to do
the job."


In Zimbabwe, where buying power has been steadily declining
over the past few years, a survey has shown that, while government employees
are paid salaries that have increased their buying power, those in the private
sector are getting poorer and poorer. Any foreign national who is expected to
work in Zimbabwe will therefore have to be paid according to international
norms, regardless of what happens to the Zimbabwean economy.


The HR director of a company which at one time was planning
to expand from South Africa into Zimbabwe, pointed out that they were expecting
to give their staff in Zimbabwe monthly increases to keep pace with the rapidly
spiralling inflation rate just so that they could maintain a particular
standard of living. The company has since put its plans on ice.


A salary survey within the call-centre industry in South
Africa, conducted by QuestConnect in Johannesburg, revealed that there was a
ceiling to how much an employer was prepared to pay and that remuneration was
not the only reason for staff turnover within call centres.


The survey showed that call-centre managers in Gauteng,
South Africa’s economic heartland, are paid up to US$40,000 a year, as opposed
to about US$35,000 in Cape Town. These figures do not, however, include
benefits, such as travel allowances, medical insurance, group life cover and
pension schemes, cell phone allowances, bonuses, profit share, staff loans and
discounts, bursaries for further study and 13th cheques (an extra month’s
bonus). All these benefits are fairly standard in South Africa, although the
combination varies depending on the size of the company, the seniority of the
position and the scarcity of the skills.


The difference in pay between Gauteng and the rest of South
Africa reflects a general trend in the country. Most companies pay higher
salaries, particularly in the Johannesburg area, where the cost of living is
noticeably higher than that of the rest of the country.

Comments are closed.