British executives earn lowest real pay in Western Europe

Senior managers in UK firms have among the lowest levels of disposable income in the world.

The World Pay Report 2008 by management consultancy Hay Group, placed UK executives as 47th in the real pay stakes, which take in the true purchasing power of executive salaries, out of the 51 economies it analysed.†

The results reflect a combination of high tax rates and the cost of living in the UK compared to developing countries. Factors such as these erode the levels of disposable income.

Due to demand for management talent far outstripping supply in the Middle East, Asia and Eastern Europe, senior managers in these fast-growth economies are enjoying the highest spending capacity. Oil-driven economies of the Middle East dominate the top of the table, with Qatar boasting the world’s best paid managers, earning over two and a half times the salaries of their British counterparts.

Peter Christie, director, reward consulting at Hay Group, said: “As the UK creeps towards 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. UK Plc will need to be smarter about how firms allocate resources. Best-performing companies will carefully target pay increases to key roles and high-performing individuals.”