Salary gap in Asia widens, but top salaries catch up with those in US

Singapore

THE pay gap between top and junior executives widened last year in nine of 15 Asian economies, even as the base salaries of those in senior management came close to - and in some cases, exceeded - those in the US.

In Singapore, executives at the higher end of the corporate hierarchy made 6.5 times more than those at the bottom last year, up from 6.3 times in 2015, a study by global advisory, broking and solutions firm Willis Towers Watson has found.

The widening of the salary gap was not glaring, though top executives here made 32 per cent more in guaranteed cash - base pay and total fixed allowances - than their US peers' 2016 average of US$233,000.

Willis Towers Watson noted, however, that many US executives in top management get short and long-term incentives, which make their overall compensation packages bigger than those in Asia.

Hong Kong was another economy in which the basic pay of top-ranking managers overtook that of their American counterparts last year, though by a lower 25 per cent.

But there, the salary divide between top and junior executives jumped from 6.2 to 7.5 times.

China, India, Indonesia, Malaysia, the Philippines, South Korea and Thailand were the other Asian economies covered in the study.

While top executives in these locations did not earn more than those in the US, they were about on par with them, said Willis Towers Watson on Monday.

Senior executives in Asia make as much as or more than their American peers in base salaries, but the story is different at lower levels of management.

Asian junior managers earned only a fraction of every US$100 that their American counterparts made last year - US$35 in China, US$21 in Thailand, US$18 in Indonesia and US$15 in India.

The biggest base salary gap between top and junior executives in the region was seen in Indonesia. There, top management earned around US$190,000 a year, 15.8 times that of junior executives, who earned about US$12,000. The differential there grew 12 times in 2015, and 11.8 times in 2014.

The next biggest gap was in Thailand, where a top manager earned about US$202,000 last year, 14.9 times that of an executive at the bottom rung of management (US$13,600) - a gap markedly wider than the 8.7 times registered in 2015.

The gap in China also widened from 2015 to 2016, but the base pay for top and junior executives grew at similar rates, by 18 and 16 per cent respectively.

The findings of the study indicate that compensation growth "is playing little part in reducing the wealth divide" in Asia, said Willis Towers Watson. "The findings also show the salary gap at lower levels of the corporate ladder in developing Asia is as wide as ever, compared with more developed parts of the world."

Sambhav Rakyan, data services practice leader at Willis Towers Watson (Asia Pacific), said businesses ought to map out a strategy to address the salary gap. "This includes having a clear career path and objectives for junior staff so they can feel confident about their future and understand their targets."

He said the issue is especially key for listed companies if their business performance is not good enough, "because they can easily become targets of shareholder activists when bloated CEO pay packages fail to produce better outcomes".