Latest research from global management consultancy, Hay Group, reveals that since 2008 the pay gap between lower level employees and senior managers in India has widened from a figure of 7.7 in 2008 to 11.7 in 2014. This implies that senior managers are paid 11.7 times more than a lower level worker at present.
The pay gap between lower level workers (comprising skilled manual, clerical, supervisor or graduate entry jobs) and senior managers (heads of departments or equivalent) is now on the rise in as twice as many countries as it is falling (42 to 21). Ben Frost, consultant at Hay Group, comments: “The job level pay gap has accelerated since the recession. However it is not purely a post-recession issue. This is a trend that has been building for the past 30 years, through economic boom.”
The change in the average percentage difference from the start of the recession in 2008 to 2014 stands at 52.14%. Amer Haleem, Country Manager, Productized Services, Hay Group India, says, “Our research shows that the figure has steadily gone up from 7.7 in 2008 to 9.2 in 2011 and now it stands at 11.7. The pay gap growth can also be linked to an intense talent war and increased competition for the few selected jobs available. This keeps the pay limited to a certain bracket.”
Not forgetting these nuances, the pay gap has accelerated as globalisation opened up workforces and lower level jobs are increasingly automated and off-shored. This reduces the number of jobs available and increases competition for those left, keeping pay down.
In contrast, pay is going up for senior managers where skills such as emotional intelligence, creative thinking and advanced judgement are in high demand and short supply. In addition, senior managers are increasingly being asked to take on more responsibilities and more.
Ben Frost continues, “The potential for a large job pay gap to cause discontent among the workforce is huge. Organisations need to be transparent with employees and communicate why reward policies are in place. They should also invest in their training and development programmes to upskill their workforces to meet the future demands of their businesses. Done properly, these solutions present an opportunity for organisations to navigate the pay gap and improve employee engagement.