Asia has landed the very dubious honor of having the world’s largest pay gap, according to a report by global management consulting firm Hay Group. Middle managers in Asian companies earn more than 14 times as much as operational employees, far more than the same workers in Europe, 2.9 times, and America, 3.5 times. Even the Middle East and Central and South America, where middle managers earn 11.9 and 10.2 times more respectively, is no match for the income inequality in Asia.
One of the possible reasons for the vast pay gap is the intense competition for experienced staff in emerging markets, leading to the increase of salaries in an attempt to entice and retain valuable employees. The repercussions of such widespread income disparity can, in the most extreme cases such as Pakistan and Egypt, contribute to an “us and them” attitude, and the ensuing societal issues this causes, according to Thomas Higgins, managing director of Hay Group.
The report highlighted a number of cities where the pay gap was the most apparent, especially in Karachi in Pakistan, where middle managers are paid 22.5 times as much as operational workers. Unsurprisingly, East Asian cities have a strong presence in the top 10 most unequal, including Shanghai (18.5), Delhi (18.3), Beijing (18), Mumbai (16.6) and Bangkok (16.6).
The repercussions of such widespread income disparity can, in the most extreme cases such as Pakistan and Egypt, contribute to an “us and them” attitude, and the ensuing societal issues this causes
The Asian Development Bank has been keeping a watchful eye on the trend of increasing income equality, with a report they published last year attributing this to advances in technology and increasing globalization, amongst other financial reforms, that have given advantages to skilled workers in urban areas and people with access to capital.
However, the believe that income inequality is negative is not unanimous, with books such as The Sprit Level Delusion arguing that the effects of large pay gaps are not as dire as one would believe. Asian governments share the view that unbridled income inequality creates serious issues that they are attempting to address.
It is not unreasonable for there to be a small level of income inequality, if everybody no matter their job, education or experience was paid the same this would rightfully be seen as bizarre and not taking into consideration the individuals background. The point at which people seem to disagree is finding the point of which income equality should be and even if governments should get involved with this issue or instead rather leave it up to the companies themselves to manage.