The pay gap between lower-level employees and senior managers has grown in every region of the world since 2008, according to a new study published by Korn Ferry. The study, which draws on data from Korn Ferry’s world-class pay database, shows the pay gap increasing in 77 percent of 58 countries in the analysis. In Asia, the average pay gap between entry and senior level jobs has increased by 15.3%.
The Korn Ferry analysis points to several reasons for the widening gap.
“At the lower end of these labor markets, automation and offshoring means that enhanced productivity results in an abundance of available labor - more people than jobs – which slows the increases in pay,” said Bob Wesselkamper, Korn Ferry Global Head of Rewards and Benefits Solutions. “Meanwhile, at the higher end, there’s a shortage of people with important hard skills and proven experience, such as STEM. Organizations also have to compete for senior managers with in-demand soft skills, such as emotional intelligence, creative thinking and the ability to manage large and complex teams. Therefore, pay at this level is going up – and is likely to increase faster than other jobs.”
While a widening gap is the norm in the majority of nations, there are areas where the gap is narrowing.
Eight out of the nine countries in Asia saw moderate increases in their pay gaps between lower-level and higher-level employees. The average increase in the region is 15.3 percent.
With an average of 7 percent, the Pacific saw the second smallest average increase in pay gap, after Europe’s average increase of 2 percent. Hong Kong and China see the least gap at 2.6% and 2.2% respectively. Australia saw an increase of 8 percent and New Zealand saw an increase of 5 percent.
According to Alvin Low-Thue, Korn Ferry Hong Kong Senior Client Partner, “Hong Kong is a well-developed economy with an extremely high cost of housing. The salary of senior management is also considerably high when compared with other economies. The room for drastic increment is limited. With the very low unemployment rate (less than 3%), the pressure on wages increase for the lower end of the labor markets is high, especially with the high cost of housing. In addition, the local government, one of the largest employers with close to 185,000 civil servants, has consistently raised the pay for low level and mid-level staff at the same rate. This has certainly helped to limit the pay gap growth.”