Income inequality, also known as the wealth gap, is getting much press and airplay lately, especially as the political season heats up ahead of the 2016 election year.
But here’s another gap you may not have heard much about: the “pay gap.”
The pay gap between senior managers and their lower-level employees has increased in every region of the world since the 2008 financial crisis, a new study has found.
The so-called “wage gap” between workers and senior managers was rising in twice as many of the more than 110 countries surveyed as it was falling, according to the review by global management consulting firm Hay Group of its online pay database. Hay Group defines lower level workers as holding “skilled manual, clerical, supervisor or graduate entry jobs” and senior managers as “heads of departments or equivalent.”
The pay gap has jumped by 2.2 percent in Europe since the start of the global recession, marking the smallest gain of any region. However, North America and Asia saw increases of 7.2 percent and 12.5 percent respectively.
On its own, the United States had a 10.6 percent increase.
What’s behind this wage gap? Fewer “middle-management roles” are partly to blame, says Hay Group.
“Higher level managers are seeing more complex work and responsibility than in past years. And the people that are able to deal with this responsibility are harder to find,” the firm’s report says. “Previous Hay Group data shows the ‘span of control’ of senior managers has considerably increased over the past few years.”
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, states a news release on the study by Hay Group. In addition, senior managers are increasingly being asked to take on more responsibilities and more complex work.
“The potential for a large job pay gap to cause discontent among the workforce is huge,” says Ben Frost, a consultant at Hay Group. “Organisations need to be transparent with employees and communicate why reward policies are in place.”
In the U.S., companies are more frequently cutting jobs and asking remaining senior managers to expand their scope of work.
“Many of those who remained employed received a pay increase as compensation for their expanded role, leading in part to the widening job level pay gap,” Hay Group says.