Senior managers in UK firms have among the lowest levels of disposable income in the world, according to a study by management consultancy Hay Group.
The World Pay Report 2008 places UK executives just 47th in the real pay stakes out of 51 economies analysed. The study also reveals a downward trend for spending power as the economic downturn bites.
The report revealed senior managers in the fast-growth economies of the Middle East, Asia, and Eastern Europe enjoy the highest spending capacity, as demand for management talent outstrips supply in these markets. UK executives were the fifth poorest in real terms, ahead of only Indonesia and the highly expensive Scandinavian economies.
The UK’s lowly ranking reflects the combination of relatively high tax rates and cost of living than in developing economies, the study concluded.
Peter Christie, director of reward at Hay Group, said: “As the UK creeps toward recession, British companies will be increasingly constrained by tightening budgets over the coming year. Pay rises will be driven by what companies can afford, rather than what’s needed to compete in the global management market.
“As a result, UK firms could risk a brain-drain to higher growth economies, as executives seek better standards of living. Best performing companies will carefully target pay increases to key roles and high-performing individuals.”
The report compared detailed salary information for 51 countries from Hay Group’s pay database. The study defined senior managers as heads of function or department in large multinational companies.