Mwafrika
July 31st, 2007, 05:39 AM
Kenyan managers now rank among the best paid globally
source - http://www.bdafrica.com/index.php?option=com_content&task=view&id=2213&Itemid=5813
1-July-2007: Kenya’s executive salaries have reached record levels with senior managers taking home the highest pay in Africa ahead of South Africa, Egypt and developed countries such as Japan, United Kingdom and Canada.
Kenya is now ranked 15th among the countries that pay the best salaries in the world and just Sh50,000 behind the United States of America—its nearest competitor—a country that has in the last decade gained global notoriety for overpaying company bosses and senior managers of listed companies.
A report released yesterday revealed that a senior manager in Kenya is earning a net pay of Sh581,000 per month, after deducting taxes and adjusting for comparable costs of living, which is as much as a counterpart in the US.
This translates into a gross salary of at least Sh831,000 per month or Sh10 million annually, after adjusting for payroll tax of 30 per cent, but excluding the cost of living.
While the status of Kenya as a regional hub for multinational business—which comprised a majority in the sample— may explain the country’s strong showing, this survey reveals an important trend of what is happening in the local business talent market.
This is the fact that Kenya-based firms have joined the global hunt for talented managers and that these firms are matching international standards to retain the best people.
The fact that local firms are paying as much as other global labour markets could influence hiring decisions of businesses looking for experienced expatriates or those looking for Kenyan managers in the diaspora who shun coming back home after attending the best schools because of perceptions of poor pay back home.
Already, firms like Diageo (through East African Breweries locally), SABMiller and others top pan African firms have been attending career fairs in London to lure students from top schools back home.
Human resource experts say the competition for jobs placement is especially fierce in the financial services sector where staff mobility is only second to that in the construction industry.
The survey by HayGroup shows that oil-rich Saudi Arabia pays the highest disposable income at Sh16 million annually followed by United Arab Emirates (UAE) at Sh15 million. In the Middle East especially in UAE’s Dubai, the construction industry is booming and even Kenya’s engineers, architects, masons and carpenters are finding their way there.
Pay within the European Union is much lower than in Kenya, relative to their economies, while it is much higher in emerging economies like Thailand, Mexico, Singapore, Lithuania, Ukraine, Poland, Brazil and even Russia.
The developed countries do not face the same labour pressure because they can hire from a larger talent pool that is increasingly coming from immigrants and fueled by brain drain.
The unprecedented growth of the emerging economies has increased the demand for top management talent thereby pushing their pay up, HayGroup said.
For those working in less developed economies, there is compensation for working away from their home locations.
Even though Kenya’s pay is high, professionals in junior categories are finding it more lucrative to work overseas especially in the case of accountants, medical doctors, nurses and engineers.
For accountants, Kenya’s adoption of the International Financial Reporting System (IFRS) in 1999 has placed it ahead of other countries even in Western Europe and the Caribbean islands that have only adopted the IFRS in the last couple of years. Thus the accountants are in demand in other countries that are only adopting the IFRS now.
In the field of medicine, at least 50 per cent of Kenyan doctors are believed to be working abroad. They seem to leave as soon as they complete the two-year bonded time of government service and are able to raise the required air ticket.
The nurses’ movement abroad is constrained mainly by the inability to raise air fare.
Besides the construction workers and finance professionals, Rob Templeton of HayGroup told Business Daily that the manufacturing sector is also seeing a mobility of professionals which is pushing the executive pay up.
In the UAE, executive pay is at an average of $229,325 (Sh1.3 million) a year excluding taxes and adjusting for cost of living. This is a comparable gross of Sh1.8 million.
ImageHowever Simon Muthiora, HR consultant with Joblink in Kenya, told Business Daily that executive pay is only high locally for a number of large firms such as Safaricom, Bamburi and Magadi Soda.
“You will be surprised when you look at what smaller companies are paying managers. It is not as high as those numbers suggest,” he said. Mr Muthiora said Kenya’s large companies can afford to pay international scales because the economy is growing and this is being reflected in corporate profits.
“We don’t have to let managers go to Europe and the US to earn what they can earn here,” he said stressing that growth in sectors will continue to push salaries up.
Kenya’s economy, like those of other emerging economies, has been growing in recent years from a state of stagnation in 2002. In 2006, the economy grew by 6.1 per cent, up from 5.7 per cent in 2005, 4.3 per cent in 2004 and 2.9 per cent in 2003 and 1.8 per cent in 2002. Some sectors have grown at a rate much higher than economic growth rate including banking and insurance.
Mr Templeton said that it was not the whole of the financial sector that was seeing movement of labour, but particular sub-sectors such as chartered accountants, actuaries and chartered financial analysts.
He said the demand for training in financial services had also gone up, but that there tended to be a lag time before the training sector could catch up with the market trends.
“It could take five years for the universities to catch on,” he said.
According to the Hay Group’s report World Pay Report, senior managers in less developed economies are left with more disposable income when compared to their western counterparts such as Russia, Turkey, Mexico and Ukraine.
Kenya’s pay for executives is higher than that of Australia, UK, Japan, Italy, New Zealand and India.
Despite having the largest economy in the world, US managers are ranked just 24th in the world pay league table of 46 countries, with a buying power equivalent to an average salary of $104,905 when tax and cost of living are taken into account.
“Companies are operating in an increasingly open and competitive global economy, and emerging markets are offering managers higher disposable incomes than established countries -which is making these locations an attractive prospect for management talent,” Iain Fitzpatrick, Director Reward Information Services for Hay Group North America, was quoted as saying on the Hay Group website.
He added: “This makes sobering reading for companies in Western Europe and the US, who face not only local competition for managerial talent, but an increasing threat from buoyant new economies.”
Hay Group compiled detailed cross-country pay at management or head of function/ department) level. Because the data was globally consistent data, it allows making of meaningful comparisons around the world. Cost of living and tax were the taken into account to reveal disposable income levels—the true purchasing power of managerial pay - for 46 countries in North America, South America, Middle East, Africa, Europe and Asia Pacific.
“The continued growth of emerging markets is creating unprecedented demand for senior talent,” said Steve Marsden, Global Director of Reward Information Services at Hay Group was quoted on the website as saying. “The resulting talent shortage, plus the premiums paid to managers in these hot markets, is inflating management pay in less advanced economies.”
In Nairobi, Mr Templeton said that employers in Middle East region tend to take home more pay as the more important staff retention incentive as opposed to others elsewhere who give performance-based incentives.
However, Hay Group underlined that as the demand for experienced managers in the Middle East was high and companies were “looking more closely at the use of long-term incentives as a way of attracting and retaining international talent.”
Hay Group is a major source of compensation and benefits data, and compares detailed pay, bonus, tax and cost-of-living information at all levels of employment, from unskilled work to senior management, in order to reveal disposable incomes for departmental heads.
source - http://www.bdafrica.com/index.php?option=com_content&task=view&id=2213&Itemid=5813
1-July-2007: Kenya’s executive salaries have reached record levels with senior managers taking home the highest pay in Africa ahead of South Africa, Egypt and developed countries such as Japan, United Kingdom and Canada.
Kenya is now ranked 15th among the countries that pay the best salaries in the world and just Sh50,000 behind the United States of America—its nearest competitor—a country that has in the last decade gained global notoriety for overpaying company bosses and senior managers of listed companies.
A report released yesterday revealed that a senior manager in Kenya is earning a net pay of Sh581,000 per month, after deducting taxes and adjusting for comparable costs of living, which is as much as a counterpart in the US.
This translates into a gross salary of at least Sh831,000 per month or Sh10 million annually, after adjusting for payroll tax of 30 per cent, but excluding the cost of living.
While the status of Kenya as a regional hub for multinational business—which comprised a majority in the sample— may explain the country’s strong showing, this survey reveals an important trend of what is happening in the local business talent market.
This is the fact that Kenya-based firms have joined the global hunt for talented managers and that these firms are matching international standards to retain the best people.
The fact that local firms are paying as much as other global labour markets could influence hiring decisions of businesses looking for experienced expatriates or those looking for Kenyan managers in the diaspora who shun coming back home after attending the best schools because of perceptions of poor pay back home.
Already, firms like Diageo (through East African Breweries locally), SABMiller and others top pan African firms have been attending career fairs in London to lure students from top schools back home.
Human resource experts say the competition for jobs placement is especially fierce in the financial services sector where staff mobility is only second to that in the construction industry.
The survey by HayGroup shows that oil-rich Saudi Arabia pays the highest disposable income at Sh16 million annually followed by United Arab Emirates (UAE) at Sh15 million. In the Middle East especially in UAE’s Dubai, the construction industry is booming and even Kenya’s engineers, architects, masons and carpenters are finding their way there.
Pay within the European Union is much lower than in Kenya, relative to their economies, while it is much higher in emerging economies like Thailand, Mexico, Singapore, Lithuania, Ukraine, Poland, Brazil and even Russia.
The developed countries do not face the same labour pressure because they can hire from a larger talent pool that is increasingly coming from immigrants and fueled by brain drain.
The unprecedented growth of the emerging economies has increased the demand for top management talent thereby pushing their pay up, HayGroup said.
For those working in less developed economies, there is compensation for working away from their home locations.
Even though Kenya’s pay is high, professionals in junior categories are finding it more lucrative to work overseas especially in the case of accountants, medical doctors, nurses and engineers.
For accountants, Kenya’s adoption of the International Financial Reporting System (IFRS) in 1999 has placed it ahead of other countries even in Western Europe and the Caribbean islands that have only adopted the IFRS in the last couple of years. Thus the accountants are in demand in other countries that are only adopting the IFRS now.
In the field of medicine, at least 50 per cent of Kenyan doctors are believed to be working abroad. They seem to leave as soon as they complete the two-year bonded time of government service and are able to raise the required air ticket.
The nurses’ movement abroad is constrained mainly by the inability to raise air fare.
Besides the construction workers and finance professionals, Rob Templeton of HayGroup told Business Daily that the manufacturing sector is also seeing a mobility of professionals which is pushing the executive pay up.
In the UAE, executive pay is at an average of $229,325 (Sh1.3 million) a year excluding taxes and adjusting for cost of living. This is a comparable gross of Sh1.8 million.
ImageHowever Simon Muthiora, HR consultant with Joblink in Kenya, told Business Daily that executive pay is only high locally for a number of large firms such as Safaricom, Bamburi and Magadi Soda.
“You will be surprised when you look at what smaller companies are paying managers. It is not as high as those numbers suggest,” he said. Mr Muthiora said Kenya’s large companies can afford to pay international scales because the economy is growing and this is being reflected in corporate profits.
“We don’t have to let managers go to Europe and the US to earn what they can earn here,” he said stressing that growth in sectors will continue to push salaries up.
Kenya’s economy, like those of other emerging economies, has been growing in recent years from a state of stagnation in 2002. In 2006, the economy grew by 6.1 per cent, up from 5.7 per cent in 2005, 4.3 per cent in 2004 and 2.9 per cent in 2003 and 1.8 per cent in 2002. Some sectors have grown at a rate much higher than economic growth rate including banking and insurance.
Mr Templeton said that it was not the whole of the financial sector that was seeing movement of labour, but particular sub-sectors such as chartered accountants, actuaries and chartered financial analysts.
He said the demand for training in financial services had also gone up, but that there tended to be a lag time before the training sector could catch up with the market trends.
“It could take five years for the universities to catch on,” he said.
According to the Hay Group’s report World Pay Report, senior managers in less developed economies are left with more disposable income when compared to their western counterparts such as Russia, Turkey, Mexico and Ukraine.
Kenya’s pay for executives is higher than that of Australia, UK, Japan, Italy, New Zealand and India.
Despite having the largest economy in the world, US managers are ranked just 24th in the world pay league table of 46 countries, with a buying power equivalent to an average salary of $104,905 when tax and cost of living are taken into account.
“Companies are operating in an increasingly open and competitive global economy, and emerging markets are offering managers higher disposable incomes than established countries -which is making these locations an attractive prospect for management talent,” Iain Fitzpatrick, Director Reward Information Services for Hay Group North America, was quoted as saying on the Hay Group website.
He added: “This makes sobering reading for companies in Western Europe and the US, who face not only local competition for managerial talent, but an increasing threat from buoyant new economies.”
Hay Group compiled detailed cross-country pay at management or head of function/ department) level. Because the data was globally consistent data, it allows making of meaningful comparisons around the world. Cost of living and tax were the taken into account to reveal disposable income levels—the true purchasing power of managerial pay - for 46 countries in North America, South America, Middle East, Africa, Europe and Asia Pacific.
“The continued growth of emerging markets is creating unprecedented demand for senior talent,” said Steve Marsden, Global Director of Reward Information Services at Hay Group was quoted on the website as saying. “The resulting talent shortage, plus the premiums paid to managers in these hot markets, is inflating management pay in less advanced economies.”
In Nairobi, Mr Templeton said that employers in Middle East region tend to take home more pay as the more important staff retention incentive as opposed to others elsewhere who give performance-based incentives.
However, Hay Group underlined that as the demand for experienced managers in the Middle East was high and companies were “looking more closely at the use of long-term incentives as a way of attracting and retaining international talent.”
Hay Group is a major source of compensation and benefits data, and compares detailed pay, bonus, tax and cost-of-living information at all levels of employment, from unskilled work to senior management, in order to reveal disposable incomes for departmental heads.