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H E A LT H W E A LT H C A R E E R
2016
TOTAL EMPLOYMENT COSTS AROUND THE WORLD
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© 2016 Mercer LLC. 2 Total Employment Costs around the World — Global
PUBLICATIONS DIRECTORSamantha Polovina
CREATIVE DIRECTORStefani Baldwin
PRODUCT MANAGERChrisy Wilson
PRODUCTION MANAGERSumit Bajaj
PROJECT MANAGERRahi Sardana
ANALYSTSCheshta DoraDeepak GaurKavita RaiSatin MalikSunil KaushalVishal Singla
WRITERSAashi ChoudharyVirginia McMorrow
COPYEDITORAnkita Rawat
DESIGNERSAshish MathewManish BhatiaVishal Kapoor
PUBLISHED BY: MERCER1166 Avenue of the Americas, New York, New York 10036, United States
Condition of SaleCopyright © 2016. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or be transmitted in any form or by any means, electronic or mechanical, photocopying, recording or otherwise, without the prior written permission of the publishers. No responsibility for loss occurring to any person acting or refraining from acting as a result of the material in this publication can be accepted by the authors or the publishers.
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© 2016 Mercer LLC.
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© 2016 Mercer LLC. 3 Total Employment Costs around the World — Global
TABLE OF CONTENTS
DATA MINING AND INSIGHTS 4
INTRODUCTION 5
FIVE QUESTIONS ABOUT TOTAL EMPLOYMENT COST 8
DEFINING THE COMPONENTS OF TOTAL EMPLOYMENT COST
11
A COMPARISON OF E7 AND G7 COUNTRIES 17
READING THE EMPLOYER TOTAL COSTS TABLES 20
AMERICAS 21
Regional summary of key findings
22
Analysis of costliest and cost-effective locations
22
Total employment cost analysis
27
Impact of benefits 36
Case study 48
EMPLOYER TOTAL COSTS TABLES 54
Argentina 55
Bolivia 57
Brazil 59
Canada 61
Chile 63
Colombia 65
Costa Rica 67
Dominican Republic 69
Ecuador 71
Guatemala 73
Mexico 75
Panama 77
Peru 79
Puerto Rico 81
Trinidad and Tobago 83
United States 85
Uruguay 87
Venezuela 89
ASIA PACIFIC 91
Regional summary of key findings
92
Analysis of costliest and cost-effective locations
92
Total employment cost analysis
97
Impact of benefits 106
Case study 118
EMPLOYER TOTAL COSTS TABLES 124
Australia 125
China–Beijing 127
China–Shanghai 129
Hong Kong 131
India 133
Indonesia 135
Japan 137
Malaysia 139
New Zealand 141
Pakistan 143
Philippines 145
Singapore 147
South Korea 149
Sri Lanka 151
Taiwan 153
Thailand 155
Vietnam 157
EUROPE, MIDDLE EAST, AND AFRICA 159
Regional summary of key findings
160
Analysis of costliest and cost-effective locations
160
Total employment cost analysis
169
Impact of benefits 182
Case study 212EMPLOYER TOTAL COSTS TABLES 221
Algeria 222
Austria 224
Belgium 226
Bulgaria 228
Croatia 230
Czech Republic 232
Denmark 234
Egypt 236
Estonia 238
Finland 240
France 242
Germany 244
Greece 246
Hungary 248
Ireland 250
Italy 252
Kazakhstan–Almaty 254
Latvia 256
Lithuania 258
Netherlands 260
Norway 262
Poland 264
Portugal 266
Romania 268
Russia–Moscow 270
Saudi Arabia 272
Serbia 274
Slovakia 276
Slovenia 278
Spain 280
Sweden 282
Switzerland 284
Tunisia 286
Turkey 288
Ukraine–Kiev 290
United Arab Emirates 292
United Kingdom 294
ABOUT THIS REPORT 296
METHODOLOGY 297
GLOSSARY 306
ABOUT MERCER 310
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© 2016 Mercer LLC. 4 Total Employment Costs around the World — Global
DATA MINING & INSIGHTSIn today’s competitive race to attract and retain highly skilled global talent, organisations require current, in-depth information on everything from local statutory benefits, to salary trends, to managing a diverse workforce. Through Mercer’s own extensive global presence, we collect and analyse data and insights that help companies take the actions necessary to support their human capital strategies. You can order any of the publications below by clicking on the title links or by visiting www.imercer.com/global.
Compensation Handbook
HR Atlas Asia Pacific
Worldwide Benefit & Employment
Guidelines
Global Car Policies
2016GLOBAL CAR POLICIES
H E A LT H W E A LT H C A R E E R
HR Management Terms
Talent All Access Portal
Global Compensation
Planning Report
International Geographic Salary
Differentials
Subscription Services
Global Diversity and Inclusions
Handbook
H E A LT H W E A LT H C A R E E R
I N T E R N A T I O N A L L I V I N G W A G E R E P O R T 2015
International Living Wage
Report
2016
AMERICASSHORT-TERM INCENTIVES AROUND THE WORLD
H E A LT H W E A LT H C A R E E R
Short-Term Incentives around
the World
Global Mobility Handbook
Global Pay Summary
Total Employment Costs around
the World
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© 2016 Mercer LLC. 5 Total Employment Costs around the World — Global
Mercer is pleased to present the eleventh edition of Total Employment Costs around the World (TEC), which covers 71 countries and 72 markets across three regions: the Americas; Asia Pacific; and Europe, Middle East, and Africa.
To launch or expand a business, companies need a qualified and engaged workforce. When hiring the right people, organisations follow budget guidelines that determine how much they can pay to buy talent.
To support their human capital decisions, organisations need to stay abreast of potential total employment costs, which involve compensation, tax rates, employer contribution levels, and the benefits provided in the respective locations.
This report is intended to help human resources and business managers assess the real employment cost in different locations. The real cost in this context is not only the cost in terms of a base salary paid to an employee, but also the total sum incurred from cash compensation, benefits, employer social security contributions, and taxes. Thus, the total employment cost is the sum of all direct and indirect costs attributed to employees. Direct cost is the employee’s salary plus all cash payments, such as bonuses, while indirect cost is the cost of items that provide a benefit to the individual employee.
This report also provides information on typical benefits offered in each market, thereby helping HR design a competitive total rewards package to attract and retain key employees. The report does this by:
• Comparing the real cost advantage among different countries for business expansion decisions.
• Assessing and comparing the benefit costs in terms of base salary across countries.
• Understanding mandatory social security contributions across countries.
• Assessing the hidden costs of employing a worker in any location.
This report shows that high annual base salary (ABS) or annual total remuneration (ATR) do not necessarily imply higher TEC levels, particularly when considering employer contribution levels in the respective markets. There might be cases where a particular market is cost-effective compared to other markets in terms of ABS and ATR, but becomes costlier when mandatory employer contributions (MEC) is added.
INTRODUCTION
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REPORT STRUCTUREThe 2016 Total Employment Costs around the World report is a key reference guide for HR to assess total remuneration data by career level and position class (PC). It provides a detailed country overview of TEC, as well as regional trends, which helps in understanding the cost advantages of selected countries.
This report has seven main sections:
• Five questions about total employment costs: This section explores different aspects of TEC.
• Defining the components of total employment cost: This section describes the core building blocks of TEC.
• A comparison of E7 and G7 countries: This section provides insights on hidden employment costs in emerging and advanced economies.
• Summary of key findings: This section provides analysis at the worldwide and regional levels on:
— Analysis of costliest and cost effective locations
— Total employment cost analysis
— Impact of benefits:
– Prevalence of employer sponsored benefits by career stream and PC
– Typical employer sponsored benefits as a percentage of annual base salary (ABS) by career stream and PC
– Mandatory employer contributions as a percentage of ABS by career stream and PC
— Case Study: Team leader management/senior professional (PC 51)
• Employer total costs tables: TEC by career stream and PC across countries, by highlighting:
— Annual compensation (organisation-weighted regressed median in USD): ABS, annual guaranteed cash (AGC), annual total compensation (ATC), and ATC + long-term incentives (LTI)
— MEC as a percentage of ABS
— Employer-sponsored benefits (percentage of ABS) and prevalence
— TEC for four employee levels: executive, management, professional, and para-professional
• Methodology: This section explains the data sources and guides for reading the report.
• Glossary: This section provides the definitions for different terminologies used in the report.
INTRODUCTION
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CAREER STREAM AND POSITION CLASS COVERAGEThe report presents data by both career stream and PC. Benchmark positions are displayed by job title, covering all PCs for a given job. PC is the Mercer level created using Mercer’s International Position Evaluation (IPE) system.
The career stream tables in the Employer total costs sections provide information for four career streams. Each career stream considers two representative PCs for the analysis:
• Executive: PCs 57 and 62
• Management: PCs 52 and 57
• Professional: PCs 47 and 52
• Para-professional (staff): PCs 42 and 47
Eleven PCs represent the market globally (42, 45, 48, 51, 54, 57, 60, 63, 66, 69, and 72). Each PC typically represents an individual hierarchical level in the organisation. Typical employee levels corresponding to the PC ranges are as follows:
• General director/president: PCs 60 and above
• Vice president/director: PCs 58–62
• Manager: PCs 53–59
• Supervisor/specialist: PCs 50–54
• Professional/administrator/staff: PCs 45–51
• Blue collar: PCs 40–45
INTRODUCTION
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WHAT COMPONENTS ARE USUALLY IN A “TOTAL REWARDS” PACKAGE?Over time, the definition of rewards has changed. Previously defined as the base salary collected bi-weekly, semi-monthly, or monthly, the concept of rewards has expanded to encompass the overall value proposition the employer offers employees:
• Remuneration (base pay, short-term incentives, and long-term incentives): Many HR and business leaders once believed that pay was the total solution for attracting talent, motivating high performance, reducing turnover, and addressing a host of other HR challenges. But, remuneration is just part of the picture.
• Benefits (health, retirement, cars, work/life, and other benefits): Benefits account for an increasing part of the reward package. Employees look closely at the company’s health and retirement plans and other benefits, and select elements in their remuneration packages aligned to their needs (which change from employee to employee, and over time).
• Career development (talent “build or buy” strategies, training and development, and career opportunities): HR professionals, while trying to determine the right combination of pay and benefits, sometimes overlook careers as an equally important reward component. To employees, it represents the future value of staying with a company. Many will even forgo higher salaries and better benefits for the opportunity to learn, grow, and advance their careers.
Source: Mercer’s 2015-2016 Compensation Handbook.
WHAT ARE SOME OF THE HIDDEN COSTS FOR EMPLOYERS?The total cost of employing a worker is considerably more than simply the take-home pay of the employee. While take-home pay constitutes the immediate perceived value of the compensation package, the “hidden” costs for employers include typical benefits provided and mandatory employer contributions (MECs) towards social security costs:
• Employer-sponsored benefits are those whereby employers contribute towards their employees’ short- and long-term benefits, which include retirement and other savings, health, death and disability, car, and other benefits.
• MECs are direct, nonwage labour costs that employers must contribute towards social security, pension, or medical expenses. These contributions have a significant impact on total employment costs.
Source: Mercer’s 2016 Total Employment Costs around the World.
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FIVE QUESTIONS ABOUT TOTAL EMPLOYMENT COSTS
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WHY CAN COMPENSATION LEVELS VARY SIGNIFICANTLY ACROSS COUNTRIES?The total cost of base salary, plus variable pay, benefits, mandatory contributions, and other reward components — when calculated for the workforce as a whole — can be staggering. In periods of economic uncertainty, most organisations attempt to reduce their costs, wherever feasible. While a company might desire a cost-effective location for their operation, if qualified talent is unavailable in that market, it may force the company to choose a higher-cost country. Knowing the variation in pay levels across countries can offer management a choice of locations.
Various factors determine the salary levels in any country or region, including the interaction between the demand and supply of labour, the level of development, quality of living, cost of living, exchange rates, mandatory wage controls, and others. For example, advanced economies — such as the US and Switzerland — have relatively high salaries compared to emerging markets, due to factors such as the relative high quality of living associated with high costs prevalent in the market, as well as scarcity of labour in these markets. As a result, employers must search for cost-advantageous locations to expand their business.
Among the many factors that have an impact on pay in different countries, the following are key:
• Talent supply and demand • The competitive market • The company’s desired pay position in the market • The compensation mix of base salary and incentives • The alignment of pay with the company’s business goals, mission, and cultural values • Professional development programmes • Mandatory minimum salaries • Cost of living • Standard of living
Source: Mercer’s 2016 Global Pay Summary.
FIVE QUESTIONS ABOUT TOTAL EMPLOYMENT COSTS
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WHY DO DIFFERENT COMPONENTS OF TEC VARY SO WIDELY ACROSS REGIONS OR COUNTRIES?Among the compensation-related factors (see earlier question) that cause variation in employment costs are geographic salary differences, which generally represent the market-driven pay variations between locations — domestic or international. Multinational companies, with employees in different geographic areas, often implement location pay differentials in their salary scales. Employers must consider these pay level differences when pricing the same job in different markets.
Beyond pay, the other components of TEC may also vary widely, depending on government regulations, country culture, and other factors. For example, while companies in some countries may pay a low percentage of total costs in the form of base salary, they may provide a larger percentage in the form of benefits — offering a broader range of perquisites such as company-paid meals or transportation. The opposite may hold true in other countries, where base pay represents nearly 100% of total remuneration.
Social security tax obligations can be an additional amount employers will pay if they send an employee on international assignment. A totalisation agreement is a bilateral agreement between countries to avoid double taxation of income — in the home and host countries — for social security purposes. Under such agreements, the taxpayer is generally exempt from social tax in the host location and continues to pay social tax at home. However, not all countries participate in such agreements, thereby potentially resulting in a significant financial burden on multinational employers as a result of mandatory contributions and the potential for assignees’ ineligibility for social security benefits.
Sources: Mercer’s 2016 International Geographic Salary Differentials; Mercer’s Innovations in International HR newsletter.
WHY IS IT IMPORTANT TO CONSIDER DIFFERENT CAREER LEVELS AND/OR POSITION CLASSES WHEN COMPARING COSTS IN DIFFERENT COUNTRIES?When it comes to deciding on staffing in a potential location or expanded operation, management should consider all aspects of employment costs — including career level or position class. Not all positions at any one organisational level have the same responsibility level or require the same knowledge and skill – or, essentially, have the same financial impact on the bottom line due to their pay. If a company requires a certain type of expertise in one location, and that position or level is scarce, such employees typically demand a premium in the market and perhaps a higher level of benefit eligibility. That segment of the workforce can play a larger role in the company’s decision to operate in a specific location.
Source: Mercer experience.
FIVE QUESTIONS ABOUT TOTAL EMPLOYMENT COSTS
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ANNUAL COMPENSATION (REGRESSED MEDIAN, USD)
TYPICAL EMPLOYER-SPONSORED BENEFITSTECRETIREMENT &
OTHER SAVINGS HEALTH DEATH & DISABILITY CAR OTHER BENEFITS MEC
ABS AGC ATC ATC+LTI % of ABS PREV % of
ABS PREV % of ABS PREV % of
ABS PREV % of ABS PREV ATR % of
ABS USD % of ABS
BY CAREER STREAMExecutive
PC 62 99,084 101,023 115,520 118,732 7.6% 20.9% 1.0% 30.2% 1.1% 62.8% 13.7% 69.8% 3.6% 41.9% 135,534 27.0% 162,287 163.8%
PC 57 199,853 204,548 257,043 276,543 9.1% 27.6% 0.1% 32.9% 0.9% 72.4% 8.2% 80.3% 5.0% 65.8% 305,116 27.0% 359,076 179.7%
Management
PC 57 88,261 90,013 104,129 105,195 11.5% 18.0% 1.6% 68.0% 1.1% 64.4% 14.9% 51.8% 4.7% 60.8% 118,637 27.0% 142,467 161.4%
PC 52 42,335 43,147 47,227 47,508 10.1% 10.3% 7.5% 94.3% 1.2% 57.7% 23.2% 23.9% 5.4% 55.9% 56,181 27.0% 67,611 159.7%
Professional
PC 52 37,218 37,894 41,342 41,398 15.3% 10.6% 7.5% 92.9% 1.3% 61.1% 13.6% 14.1% 5.2% 58.1% 48,107 27.0% 58,156 156.3%
PC 47 20,283 20,698 21,764 21,780 10.7% 6.0% 17.1% 93.2% 1.1% 56.8% 25.3% 6.0% 8.3% 53.7% 27,526 27.0% 33,003 162.7%
Para-professional
PC 47 22,747 23,178 24,181 24,181 14.9% 9.1% 19.6% 98.6% 1.4% 53.1% 19.0% 3.5% 9.2% 65.7% 30,251 27.0% 36,393 160.0%
PC 42 13,985 14,298 14,756 14,756 4.0% 6.3% 30.7% 87.4% 1.4% 53.8% – 2.1% 7.0% 61.5% 20,066 27.0% 23,842 170.5%
As indicated in the table, a typical para-professional employee at PC 47 would receive:
• USD22,747 as the annual base salary.
• USD431 in the form of guaranteed allowances.
• USD1003 as short-term incentives and bonus.
• USD0 in the form of long-term incentives.
• USD6,070 as supplementary benefits.
In addition, the employer must contribute USD6,142 towards mandatory social security costs.
Salary (ABS, AGC, ATC, ATC+LTI and ATR) data in the table analysis represent the regressed organisation-weighted median data, calculated using banding.
The typical benefits information is the median, calculated using actual data reported by the respondent organisations.
DEFINITION OF TERMS
ABS = Annual Base Salary
AGC = Annual Guaranteed Cash
ATC = Annual Total Compensation
ATC + LTI = Annual Total Compensation + Long-Term Incentives
% of ABS = Percentage of Annual Base Salary
PREV = Percentage of companies providing benefit
ATR = Annual Total Remuneration
MEC = Mandatory Employer Contributions
TEC = Total Employment Cost
EN-DASH = Data not available; N/A = Data not applicable
READING THE EMPLOYER TOTAL COSTS TABLES
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ANNUAL COMPENSATION (REGRESSED MEDIAN, USD)
TYPICAL EMPLOYER-SPONSORED BENEFITSTECRETIREMENT &
OTHER SAVINGS HEALTH DEATH & DISABILITY CAR OTHER BENEFITS MEC
ABS AGC ATC ATC+LTI % of ABS PREV % of
ABS PREV % of ABS PREV % of
ABS PREV % of ABS PREV ATR % of
ABS USD % of ABS
BY POSITION CLASSPC 72 – – – – – – – – – – – – – – – – – –
PC 69 – – – – – – – – – – – – – – – – – –
PC 66 193,294 199,641 236,746 257,755 12.3% 55.6% 0.6% 100.0% 0.1% 100.0% 2.4% 55.6% 0.6% 44.4% 279,233 13.1% 304,507 157.5%
PC 63 125,638 129,916 151,559 161,399 16.5% 26.1% 1.0% 95.7% 0.3% 95.7% 11.6% 43.5% 0.6% 17.4% 174,781 13.1% 191,260 152.2%
PC 60 81,663 84,542 97,024 101,064 4.1% 28.7% 1.6% 92.0% 0.5% 90.8% 12.6% 49.4% 1.0% 14.9% 109,401 13.2% 120,163 147.1%
PC 57 53,079 55,015 62,112 63,283 5.0% 30.9% 3.2% 93.8% 0.6% 93.8% 18.1% 44.8% 1.2% 13.9% 68,478 13.3% 75,524 142.3%
PC 54 34,501 35,801 39,763 39,763 4.9% 27.6% 3.0% 92.6% 0.6% 91.5% 15.0% 26.5% 1.2% 12.5% 42,863 13.4% 47,493 137.7%
PC 51 21,777 22,496 24,957 25,136 5.2% 27.5% 4.2% 93.6% 0.5% 92.6% 14.2% 15.4% 2.4% 13.1% 26,866 13.7% 29,843 137.0%
PC 48 13,913 14,437 15,801 15,891 7.0% 27.0% 5.7% 91.9% 0.5% 91.9% 19.4% 11.4% 1.9% 12.6% 17,170 15.0% 19,264 138.5%
PC 45 8,889 9,265 10,004 10,047 4.4% 28.6% 8.1% 91.0% 0.5% 91.0% 2.9% 8.3% 4.4% 11.4% 10,973 15.6% 12,363 139.1%
PC 42 5,679 5,946 6,333 6,352 3.4% 25.8% 16.0% 91.8% 0.4% 89.0% 5.8% 2.2% 5.2% 9.9% 7,013 15.8% 7,909 139.3%
MALAYSIA
TOTAL EMPLOYMENT COSTS, BY POSITION CLASS, 2015
ABOUT TOTAL EMPLOYMENT COSTS (TEC)
TEC represents the sum total of direct and indirect employment costs, which include compensation, employer-sponsored benefits, and mandatory employer contributions.
Annual total remuneration (ATR) includes compensation and benefits components, such as base salary, allowances, variable and guaranteed cash, long-term incentives, and benefits (retirement, savings, health, death and disability, car, and miscellaneous other benefits).
Mandatory employer contributions are direct, nonwage labour costs that employers must contribute towards social security, pension, or medical expenses.
DEFINITION OF LOCAL BENEFITS
Retirement and other savings: Supplementary pension.
Health: Health plan.
Death and disability: Life and accident insurance.
Car: Car benefit.
Other benefits: Flexible benefits programmes and loans.
Mandatory employer contributions (MEC): Mandatory employer contributions.
DEFINITION OF TERMS
ABS = Annual Base Salary
AGC = Annual Guaranteed Cash
ATC = Annual Total Compensation
ATC + LTI = Annual Total Compensation + Long-Term Incentives
% of ABS = Percentage of Annual Base Salary
PREV = Percentage of companies providing benefit
ATR = Annual Total Remuneration
MEC = Mandatory Employer Contributions
TEC = Total Employment Cost
EN-DASH = Data not available; N/A = Data not applicable
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MALAYSIA
TOTAL EMPLOYMENT COSTS, BY CAREER STREAM, 2015
ANNUAL COMPENSATION (REGRESSED MEDIAN, USD)
TYPICAL EMPLOYER-SPONSORED BENEFITSTECRETIREMENT &
OTHER SAVINGS HEALTH DEATH & DISABILITY CAR OTHER BENEFITS MEC
ABS AGC ATC ATC+LTI % of ABS PREV % of
ABS PREV % of ABS PREV % of
ABS PREV % of ABS PREV ATR % of
ABS USD % of ABS
BY CAREER STREAMExecutive
PC 62 102,747 108,138 126,686 133,429 5.3% 42.2% 1.4% 95.6% 0.6% 93.3% 8.3% 44.4% 0.0% 20.0% 147,645 13.1% 161,147 156.8%
PC 57 63,784 67,300 76,680 78,467 5.8% 34.7% 1.6% 93.4% 0.5% 95.0% 11.2% 45.5% 1.2% 10.7% 85,199 13.2% 93,636 146.8%
Management
PC 57 49,342 50,827 57,447 57,447 5.4% 33.9% 3.6% 93.9% 0.7% 93.9% 19.7% 38.3% 1.1% 15.7% 62,271 13.3% 68,831 139.5%
PC 52 25,299 26,143 28,991 29,413 5.4% 28.3% 3.2% 93.5% 0.6% 91.4% 14.8% 19.0% 3.3% 12.2% 31,360 13.6% 34,795 137.5%
Professional
PC 52 22,986 23,894 26,338 26,338 5.3% 27.8% 4.2% 96.2% 0.5% 95.5% 20.3% 13.5% 2.0% 13.5% 28,133 13.6% 31,267 136.0%
PC 47 12,339 12,867 14,020 14,020 5.9% 27.1% 6.0% 92.9% 0.6% 93.2% 29.9% 9.8% 6.6% 12.2% 15,263 15.2% 17,136 138.9%
Para-professional
PC 47 11,389 11,665 12,536 12,752 4.9% 40.9% 8.0% 91.3% 0.5% 93.0% – – 2.5% 12.2% 13,831 15.3% 15,571 136.7%
PC 42 5,567 5,856 6,271 6,307 3.4% 25.8% 16.0% 91.8% 0.4% 89.0% 5.8% 2.2% 5.2% 9.9% 6,914 15.7% 7,790 139.9%
ABOUT TOTAL EMPLOYMENT COSTS (TEC)
TEC represents the sum total of direct and indirect employment costs, which include compensation, employer-sponsored benefits, and mandatory employer contributions.
Annual total remuneration (ATR) includes compensation and benefits components, such as base salary, allowances, variable and guaranteed cash, long-term incentives, and benefits (retirement, savings, health, death and disability, car, and miscellaneous other benefits).
Mandatory employer contributions are direct, nonwage labour costs that employers must contribute towards social security, pension, or medical expenses.
DEFINITION OF LOCAL BENEFITS
Retirement and other savings: Supplementary pension.
Health: Health plan.
Death and disability: Life and accident insurance.
Car: Car benefit.
Other benefits: Flexible benefits programmes and loans.
Mandatory employer contributions (MEC): Mandatory employer contributions.
DEFINITION OF TERMS
ABS = Annual Base Salary
AGC = Annual Guaranteed Cash
ATC = Annual Total Compensation
ATC + LTI = Annual Total Compensation + Long-Term Incentives
% of ABS = Percentage of Annual Base Salary
PREV = Percentage of companies providing benefit
ATR = Annual Total Remuneration
MEC = Mandatory Employer Contributions
TEC = Total Employment Cost
EN-DASH = Data not available; N/A = Data not applicable
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METHODOLOGY
READING THE REPORT Mercer bases the quality and accuracy of Total Employment Costs around the World on our globally consistent methodology of defining pay and positions, as well as our vast, country-by-country database of compensation and benefits data.
Pay data within each country matches the core benchmark position structure, using Mercer’s International Position Evaluation (IPE) methodology. The IPE methodology ensures that position levels are consistently and accurately matched, regardless of the country or industry.
The report provides information on major compensation components, such as annual base salary (ABS), annual guaranteed cash (AGC), annual total cash (ATC), ATC+ long-term incentives (LTI), and annual total remuneration (ATR). In addition, the report provides the typical mandatory employer contributions (MEC) for sample position class (PC) and career streams.
COMP 1/ANNUAL BASE SALARY
COMP2/ANNUAL GURANTEED CASH
COMP 3/ANNUAL TOTAL CASH
COMP 4/ANNUAL TOTAL CASH+LTI
COMP 5/ANNUAL TOTAL REMUNERATION
TOTAL EMPLOYMENT COSTS
The information in the country tables can be interpreted as below:
ANNUAL BASE SALARY
ANNUAL BASE SALARY+
ANNUAL BASE SALARY+
ANNUAL BASE SALARY+
ANNUAL BASE SALARY+
ANNUAL BASE SALARY+
Guaranteed allowances=
Guaranteed allowances+
Short-term incentives=
Guaranteed allowances+
Short-term incentives+
Long-term incentives=
Guaranteed allowances+
Short-term incentives+
Long-term incentives+
Benefits=
Guaranteed allowances+
Short-term incentives+
Long-term incentives+ Benefits+
Mandatory employer
contributions=
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© 2016 Mercer LLC. 298 Total Employment Costs around the World — Global
ORGANISATION-WEIGHTED REGRESSION
The Mercer WIN® regression methodology encompasses a number of different steps. The analysis calculates market statistics (quartiles, mean, and median) for each position class (PC) in a selected market, followed by an exponential regression on the market median. Each PC has calculations of ratios between the quartile and median market values, as well as an exponential equation using all quartile median ratios. The resulting ratio formula applied to each regressed median value results in the regressed quartile value. The Mercer regression approach uses organisation-weighted market median.
Organisation weighting helps to:
• Mute the impact of any sample dominance that may exist in the survey, as any sample changes year-over-year.
• Better reflect company policy, which is essentially what market regressions attempt to capture.
In summary, organisation-weighted median regressed market results deliver a policy line perspective to regression, which is consistent with sound compensation principles. In addition, it improves year-over-year consistency in survey market data.
To better reflect market pay patterns, Mercer market regressions consist of two or three “bands” or line segments. The job level grouping or banding, applied to the organisation-weighted regressed values, create multiple market regression lines that better represent the different pay patterns by employee level.
MANDATORY EMPLOYER CONTRIBUTION CALCULATIONS
Mandatory employer contributions (MEC) calculations used Mercer’s 2015 Personal Tax Reports and Hypothetical Personal Tax Calculator. The tax assumptions in this report reflect typical deductions for a married couple with no children. Although individual taxation rates vary according to circumstances, the report does not include variations in taxation resulting from individual conditions or circumstances beyond marital and parental status.
Some countries have governmental subunits that impose taxes. Taxation levels vary significantly in these countries, depending on local and regional taxes. This report applied local tax rates that represent the national average tax rate to compare differentials across countries. That is, the analysis used local tax rates in the city of Beijing, the province of Ontario, the canton of Geneva, and the state of Illinois as selected local tax rates for China, Canada, Switzerland, and the US, respectively.
METHODOLOGY
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© 2016 Mercer LLC. 299 Total Employment Costs around the World — Global
METHODOLOGY
EXCEPTIONS AND NOTES
• In India and Colombia, instead of calculating TEC as a percentage of ABS, AGC is used to calculate TEC and benefits as a percentage of AGC. The benefits information presented in the table are the typical supplementary benefit costs incurred by the employer on and above the mandatory costs.
• Data for Kazakhstan, Russia, and Ukraine is for only one city per country and is represented as Kazakhstan–Almaty, Russia–Moscow, and Ukraine–Kiev throughout the report. The report covers two cities in China: China–Beijing and China–Shanghai.
• The ATR information for Europe, Middle East, and Africa countries are nongross up information calculated by excluding taxes; thus, they are not same as the values in Mercer’s Total Remuneration Surveys.
• Information on prevalence of benefits is not available for Canada and the US.
• ATR information for the US and Canada is an estimate based on typical benefits costs.
• An “en-dash (–)” represents the missing data points in the tables; the countries with missing data are excluded from the graphs.
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© 2016 Mercer LLC. 300 Total Employment Costs around the World — Global
AmericasArgentina ARS 9.47Bolivia BOB 6.92Brazil BRL 3.88Canada CAD 1.31Chile CLP 684.29Colombia COP 2944.08Costa Rica CRC 534.79Dominican Republic DOP 45.24Ecuador USD 1.00Guatemala GTQ 7.70Mexico MXN 16.59Panama PAB 1.00Peru PEN 3.24Puerto Rico USD 1.00Trinidad and Tobago TTD 6.35United States USD 1.00Uruguay UYU 29.31Venezuela VEF 6.30
Country Currency
code
USD1=
METHODOLOGY
CURRENCY CONVERSION RATES IN USD AS OF 6 NOVEMBER 2015 — AMERICAS
Note: Exchange rates in this table are rounded to two significant digits; however, the data presented in the report were prepared using a higher degree of precision.
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© 2016 Mercer LLC. 301 Total Employment Costs around the World — Global
Asia PacificAustralia AUD 1.39China–Beijing CNY 6.35China–Shanghai CNY 6.35Hong Kong HKD 7.75India INR 65.02Indonesia IDR 13842.05Japan JPY 120.11Malaysia MYR 4.26New Zealand NZD 1.50Pakistan PKR 104.60Philippines PHP 46.34Singapore SGD 1.40South Korea KRW 1147.22Sri Lanka LKR 141.01Taiwan TWD 32.50Thailand THB 35.71Vietnam VND 22368.38
Country Currency
code
USD1=
METHODOLOGY
CURRENCY CONVERSION RATES IN USD AS OF 6 NOVEMBER 2015 — ASIA PACIFIC
Note: Exchange rates in this table are rounded to two significant digits; however, the data presented in the report were prepared using a higher degree of precision.
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© 2016 Mercer LLC. 302 Total Employment Costs around the World — Global
Europe, Middle East, and AfricaAlgeria DZD 105.85Austria EUR 0.89Belgium EUR 0.89Bulgaria BGN 1.74Croatia HRK 6.79Czech Republic CZK 24.15Denmark DKK 6.64Egypt EGP 7.92Estonia EUR 0.89Finland EUR 0.89France EUR 0.89Germany EUR 0.89Greece EUR 0.89Hungary HUF 277.30Ireland EUR 0.89Italy EUR 0.89Kazakhstan–Almaty KZT 275.86Latvia EUR 0.89
Europe, Middle East, and AfricaLithuania EUR 0.89Netherlands EUR 0.89Norway NOK 8.27Poland PLN 3.78Romania RON 3.94Russia–Moscow RUB 63.13Saudi Arabia SAR 3.75Serbia RSD 106.90Slovakia EUR 0.89Slovenia EUR 0.89Spain EUR 0.89Sweden SEK 8.33Switzerland CHF 0.97Tunisia TND 1.97Turkey TRY 2.93Ukraine–Kiev UAH 21.86United Arab Emirates AED 3.67United Kingdom GBP 0.65
Country CountryCurrency Currency
code code
USD1= USD1=
METHODOLOGY
CURRENCY CONVERSION RATES IN USD AS OF 6 NOVEMBER 2015 — EUROPE, MIDDLE EAST, AND AFRICA
Note: Exchange rates in this table are rounded to two significant digits; however, the data presented in the report were prepared using a higher degree of precision.SAMPLE
© 2016 Mercer LLC. 303 Total Employment Costs around the World — Global
METHODOLOGY
DATA SOURCES — AMERICAS
Country Source Number of participants
AMERICAS
Argentina AR: Total Remuneration Survey (May) 410
Bolivia BO: Total Remuneration Survey (June) 29
Brazil BR: Total Remuneration Survey (May) 472
Canada CA: Total Remuneration Survey (April) 888
Chile CL: Total Remuneration Survey (May) 239
Colombia CO: Total Remuneration Survey (May) 318
Costa Rica CR: Total Remuneration Survey (June) 94
Dominican Republic DO: Total Remuneration Survey (June) 57
Ecuador EC: Total Remuneration Survey (May) 102
Guatemala GT: Total Remuneration Survey (June) 81
Mexico MX: Total Remuneration Survey (May) 579
Panama PA: Total Remuneration Survey (May) 129
Peru PE: Total Remuneration Survey (May) 205
Puerto Rico PR: Total Remuneration Survey (June) 45
Trinidad and Tobago TT: Total Remuneration Survey (June) 27
United States US: Total Remuneration Survey (March) 1,499
Uruguay UY: Total Remuneration Survey (July) 97
Venezuela VE: Total Remuneration Survey (May) 164SAMPLE
© 2016 Mercer LLC. 304 Total Employment Costs around the World — Global
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DATA SOURCES — ASIA PACIFIC
Country Source Number of participants
ASIA PACIFIC
Australia AU: Total Remuneration Survey All Industries (July) 728
China–Beijing CN-Beijing: Total Remuneration Survey All Industries Office (June) 803
China–Shanghai CN-Shanghai: Total Remuneration Survey All Industries Office (June) 1,102
Hong Kong HK: Total Remuneration Survey (July) 451
India IN: Total Remuneration Survey (June) 691
Indonesia ID: Total Remuneration Survey (June) 467
Japan JP: Total Remuneration Survey (June) 534
Malaysia MY: Total Remuneration Survey (June) 478
New Zealand NZ: Total Remuneration Survey All Industries (July) 214
Pakistan PK: Total Remuneration Survey (July) 149
Philippines PH: Total Remuneration Survey (June) 330
Singapore SG: Total Remuneration Survey (June) 771
South Korea KR: Total Remuneration Survey (July) 449
Sri Lanka LK: Total Remuneration Survey (June) 61
Taiwan TW: Total Remuneration Survey (July) 363
Thailand TH: Total Remuneration Survey (June) 475
Vietnam VN: Total Remuneration Survey (June) 520SAMPLE
© 2016 Mercer LLC. 305 Total Employment Costs around the World — Global
Country Source Number of participants
Norway NO: Total Remuneration Survey (July) 184
Poland PL: Total Remuneration Survey (April) 386
Portugal PT: Total Remuneration Survey (April) 304
Romania RO: Total Remuneration Survey (April) 199
Russia–Moscow RU: Total Remuneration Survey (April) 299
Saudi Arabia SA: Total Remuneration Survey (May) 281
Serbia RS: Total Remuneration Survey (April) 143
Slovakia SK: Total Remuneration Survey (April) 101
Slovenia SI: Total Remuneration Survey (April) 66
Spain ES: Total Remuneration Survey (April) 327
Sweden SE: Total Remuneration Survey (July) 362
Switzerland CH: Total Remuneration Survey (April) 249
Tunisia TN: Total Remuneration Survey (May) 79
Turkey TR: Total Remuneration Survey (May) 199
Ukraine–Kiev UA: Total Remuneration Survey (April) 135
United Arab Emirates AE: Total Remuneration Survey (May) 337
United Kingdom UK: Total Remuneration Survey (April) 508
METHODOLOGY
Country Source Number of participants
EUROPE, MIDDLE EAST, AND AFRICA
Algeria DZ: Total Remuneration Survey (May) 85
Austria AT: Total Remuneration Survey (April) 163
Belgium BE: Total Remuneration Survey (April) 265
Bulgaria BG: Total Remuneration Survey (May) 142
Croatia HR: Total Remuneration Survey (April) 74
Czech Republic CZ: Total Remuneration Survey (April) 201
Denmark DK: Total Remuneration Survey (June) 241
Egypt EG: Total Remuneration Survey (May) 110
Estonia EE: Total Remuneration Survey (May) 56
Finland FI: Total Remuneration Survey (June) 203
France FR: Total Remuneration Survey (April) 483
Germany DE: Total Remuneration Survey (April) 498
Greece GR: Total Remuneration Survey (April) 133
Hungary HU: Total Remuneration Survey (April) 150
Ireland IE: Total Remuneration Survey (April) 149
Italy IT: Total Remuneration Survey (April) 245
Kazakhstan–Almaty KZ: Total Remuneration Survey (April) 99
Latvia LV: Total Remuneration Survey (May) 180
Lithuania LT: Total Remuneration Survey (May) 110
Netherlands NL: Total Remuneration Survey (April) 299
DATA SOURCES — EUROPE, MIDDLE EAST, AND AFRICA
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© 2016 Mercer LLC. 306 Total Employment Costs around the World — Global
GLOSSARY
BENEFITSEmployer-sponsored benefits: Nonwage payment or benefit provided by employers at no charge that is above and beyond salary or wages; also known as fringe benefits, such as:
• Retirement and other savings: Share purchase plan, retirement programme, deferred savings fund, supplementary pension, pension/gratuities plan, additional provident fund, defined benefit plan, and defined contribution plan.
• Health: Supplemental medical plan, medical check-ups, dental and vision care, and wellness plan.
• Death and disability: Life and accident insurance, life and accidental death and dismemberment insurance, business travel, and long-term disability.
• Car benefits: Company car related expenses, allowance, usage, replacement, option to buy, financial aid, transportation costs, purchase, and lease costs.
• Other benefits: Canteen meals, restaurant tickets, club benefits, food coupons, personal loans, flexible benefit plans, fringe benefits such as tax and tax-free items, mobile phone, education reimbursement, and discounts.
Mandatory employer contributions: Direct, nonwage labour costs that employers must contribute towards social security, pension, or medical expenses.
CAREER STREAMSExecutive: Typically includes top executives and function heads providing strategic vision and/or tactical/strategic direction across multiple functions or sub-functions.
Management: Typically management and supervisory professionals focusing on tactical and/or operational activities within a specified job function.
Professional: Typically professionals with no management responsibility, although they may provide mentoring and coaching to less-experienced staff.
Para-professional: Typically roles that are semi-skilled or unskilled with no supervisory or management responsibility.SAMPLE
© 2016 Mercer LLC. 307 Total Employment Costs around the World — Global
COMPENSATIONCompensation data in this report represent the following compensation items:
Annual base salary (ABS): Monthly base salary multiplied by the number of months per year that salary is paid, according to company policy.
Annual fixed allowance: The amount of nonvariable allowances; an allowance is a salary supplement to cover job requirements, with reimbursement usually based on actual costs. Typical allowances might include allowances for maternity, festival, transition, meal, car, childcare, family, vacation, sickness, housing, and others.
Annual guaranteed cash (AGC): Annual base salary plus annual fixed allowances.
Annual total cash (ATC): Annual base salary plus annual fixed allowances plus annual variable cash.
Annual total direct compensation: Annual total cash plus long-term incentives.
GLOSSARY
COMP 1/ANNUAL BASE SALARY
COMP2/ANNUAL GURANTEED CASH
COMP 3/ANNUAL TOTAL CASH
COMP 4/ANNUAL TOTAL CASH+LTI
COMP 5/ANNUAL TOTAL REMUNERATION
TOTAL EMPLOYMENT COSTS
ANNUAL BASE SALARY
ANNUAL BASE SALARY+
ANNUAL BASE SALARY+
ANNUAL BASE SALARY+
ANNUAL BASE SALARY+
ANNUAL BASE SALARY+
Guaranteed allowances=
Guaranteed allowances+
Short-term incentives=
Guaranteed allowances+
Short-term incentives+
Long-term incentives=
Guaranteed allowances+
Short-term incentives+
Long-term incentives+
Benefits=
Guaranteed allowances+
Short-term incentives+
Long-term incentives+ Benefits+
Mandatory employer
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© 2016 Mercer LLC. 308 Total Employment Costs around the World — Global
Annual total remuneration (ATR): Annual base salary plus annual fixed allowances plus annual variable cash plus LTIs plus benefits.
Annual variable cash: The amount of nonfixed cash, or variable pay, which is a reward based on individual, group, or organisational performance rather than time spent on the job or the job’s value.
Long-term incentive (LTI): Variable pay based on measures that extend for a period of more than one year. Their role is to link the financial rewards of executives and, increasingly, broaden the levels of employees to the organisation’s long-term performance. They include stock/share options, stock grants, deferred cash compensation, equity-based, and cash plans.
Short-term incentive (STI): Rewards relating to the performance against selected criteria over a period of one year or less, which include performance-related bonuses, sales bonuses, sales commissions, profit-sharing schemes, other bonuses, and exceptional premiums.
Total employment cost (TEC): Annual total remuneration plus mandatory employer contributions, computed on annual base salary.
MERCER SURVEY AND EVALUATION SYSTEMSInternational position evaluation (IPE) methodology: Pay data within each country matches the core benchmark position structure, using Mercer’s IPE methodology — ensuring that position levels are consistently and accurately matched, regardless of the country or industry. The IPE focuses on four dimensions:
• Impact and contribution to business unit results
• Communication
• Innovation
• Required knowledge
Risk is an optional factor that may be used in high-risk industries or professions. Each factor is divided into degrees, which have individual weightings. The system facilitates a review of positions within a company, as well as across companies and industries. It allows accurate comparisons between positions — as job titles alone can be misleading — by evaluating the position rather than the person holding that position.
GLOSSARY
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© 2016 Mercer LLC. 309 Total Employment Costs around the World — Global
Position class (PC): The Mercer level created using Mercer’s IPE system. PC is the “common currency” that defines job levels. It expresses the relative value of the position compared to other positions within a company and across companies participating in Mercer’s compensation surveys. PCs also allow one to compare remuneration across functions for jobs of a similar size. Typical PCs for different employee levels are:
• Executives: PCs 57 and above
• Management: PCs 52–57
• Professional: PCs 47–52
• Para-professional (staff): PCs 47 and below
Total Remuneration Survey (TRS): Mercer conducts TRS in more than 60 countries. Each TRS includes data for a set of core benchmark positions and, in many markets, industry-specific positions such as consumer goods, pharmaceuticals, and high-technology. Mercer’s TRS allows access to market data for pay and benefits, as well as the ability to generate statistics tailored to an organisation’s needs via Mercer’s online delivery tool, Mercer WIN®.
GLOSSARY
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© 2016 Mercer LLC. 310 Total Employment Costs around the World — Global
Mercer is a global consulting leader in talent, health, retirement, and investments. Mercer helps clients around the world advance the health, wealth, and performance of their most vital asset – their people. Mercer’s 20,500+ employees are based in more than 40 countries, and we operate in more than 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy, and human capital.
ABOUT MERCER
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For further information, please contact your local Mercer office or visit our website at www.mercer.com
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