Wages and Benefits for European Employee - tendencies, novelties, changes

When it comes to wages and benefits we all know the debates tend to become quite “enflamed”. This is most true especially for the last 4 years, that is since the “worldwide economic crisis” grabbed a chair and comfortably accommodated itself in our offices, homes and lives. Some would say it is over, others that the worst is yet to come.


On the other hand statistics show that some countries – the so called “emerging markets” – had a steeper economic growth, while others – “mature markets” – recorded a more linear growth. Since economic growth is directly related to the country GDP, we notice that some low income countries have registered a higher annual GDP growth percentage than high income countries, and this is valid not only for the last 4 years, but even for the last 10 years.


One of the most critical factors that influenced this growth is represented by the investments of global corporations into emerging markets. Yet less attention has been given to the impact of variable GDP growth rates between emerging and mature markets on wages levels. Consequently many multinationals were being surprised by the high compensation levels in emerging markets, especially for senior managers.


Yet, the Hay Group Survey for “Top Executive Compensation in Europe” shows a clear cautiousness of employers across Europe for salary increases at top levels in mature markets. Top executive base salaries rose by 2% in 2012, compared with 2.6% in 2011. In comparison, across the general European employee population, wages rose by 2.1% in 2012  - Switzerland sanding out though.


Short-term incentivepayouts for top executives against targets vary considerably from country to country, reflecting different economic circumstances and approaches to target setting. Although target bonus opportunities continued to increase in 2012, payouts were quite flat at the European median, compared to a 10.5% increase last year.


To put this into further context, about 56% of executives were paid the same or less short term incentives than 2011, whereas in 2011 vs. 2010 this number was 40%.


Looking at sector trends across Europe – both base salary and total cash growth – we notice that the levels of top executive pay increases vary considerably across sectors, reflecting the volatile economic environment and variations in talent markets.


If we look at middle management and non-management population, we notice that a considerable focus has been placed on attracting and retaining key talents and on efficiency. The reflection of this in wages across European countries shows a higher value to operational positions, both in base salary and total cash.


Total Cash

For 2013, Hay Group ran a comparative analysis on salary forecasts on a total of 14 million employees in 20,000 companies across the world. Looking at Europe, we foresee an approx. 3.3% salary increase across Europe, and an approx. 5% for Romania across the entire market .


You will find the full article in English in the attached pdf.