Ernst & Young issues compensation and benefits survey report for 2010/2011
Moscow, 28 September 2010 – Ernst & Young, a global leader in assurance and advisory services, has issued its final report on the General Industry Compensation and Benefits Survey for 2010/2011. Ernst & Young’s Performance and Reward Group details remuneration data for 316 cross-industry jobs as well as trends in HR policies and practices in Russia. This year 182 Russian and international companies in various industries participated in the survey. Most of the participants are large production enterprises with wide regional coverage.
“Changes in the Russian economy significantly impact the Russian labor market. Positive trends in the development of the Russian economy have led to an improvement in the labor market. In particular, in the cash compensation area, we are observing a return to the pre-recession policy where annual pay increases were 2.5%–3% above the official inflation rate. Based on the survey data, the increase in salary levels exceeded the inflation rate by 3.9% in 2010, and this partially compensates for the fall in the real earnings of employees caused by the economic recession; actual earnings decreased by 5.5% on average in 2009,” said Zhanna Dobritskaya, Partner in Ernst & Young’s Human Capital Group.
More than 80% of the companies participating in the survey plan salary increases of 10% on average for next year. This planned increase demonstrates optimistic expectations of employers for 2010 and 2011. At the same time, some experts forecast a jump in the inflation rate at the end of 2010 and rapid increases in food prices, and this may force employers to consider adjusting salary levels during the year.
However, the majority of employers refer to corporate and individual performance appraisal results and to labor market data when reviewing the salary levels of employees, and fewer companies refer to the inflation rate. In particular, this practice is followed when reviewing the salary levels of management.
“Positive trends in the area of compensation and benefits affected the variable part of employees’ compensation as well. The majority of employers paid performance-related bonuses for 2009, despite the economic decline in the first half of 2009. The actual size of performance-related bonuses was broadly on target. As for the target level of performance-related bonuses for 2010, these exceeded the actual performance-related bonuses paid in 2009 by 3% for manual workers, specialists and middle management and by 10-15% for senior management,” said Ekaterina Ukhova, Senior Manager in Ernst & Young’s Human Capital Group.
The positive development of the Russian economy in the second half of 2009 impacted employers’ plans. Approximately 50% of the survey participants plan to increase the number of employees by 13% on average, and only 10% of the companies plan to reduce headcount by 10% on average. Implementation of these plans might compensate for the staff reduction during the recession, which was at a level of 10% on average in the period from November 2008 through December 2009.
Based on the survey results, the majority of companies participating in the survey have differentiated benefit packages for employees contingent upon job level. Primarily, the cost and terms of benefits are different, rather than the benefits themselves. Such a differentiated approach to structuring benefit packages gave employers additional advantages during the economic recession, when they were able to more effectively optimize HR costs. Despite the differences in benefit packages, the standard benefits offered by the majority of employers has remained constant for the past several years and include medical insurance, reimbursement of mobile phone expenses, corporate cars and sponsored meals.
During the recession, the majority of employers reduced their training budgets, so the fact that most companies plan to increase their training budgets is a positive indicator for investments in personnel.
“Summarizing the above, we can say that the Russian labor market is now demonstrating a positive trend in its development after the economic downturn caused by the global economic recession. A shift of HR management priorities towards personnel recruitment and retention also indicates stabilization of the Russian labor market,” concluded Ekaterina Ukhova.
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Our Human Capital department in Moscow brings together professionals to help organizations in different aspects of work with personnel. Our services include the establishment of HR strategy, designing effective compensation and motivation systems, assistance with expatriate structuring (legal support, labor and immigration law issues), and payroll services.
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