Salary increases registered a slower momentum this year as median remuneration packages increased by 2.6 per cent, down from the 3.8 per cent rise recorded in 2009 and the 4.7 per cent growth in 2008, according to the 2010/2011 Misco Salaries and Benefits Report.
Salary increases registered a slower momentum this year as median remuneration packages increased by 2.6 per cent, down from the 3.8 per cent rise recorded in 2009 and the 4.7 per cent growth in 2008.
Keenly awaited by employers, the report has been published annually since 1986, and is somewhat of a hallmark for the Mrieħel-based market and recruitment consultancy.
“Undoubtedly the impact of the international recession on a number of our country’s economic activities must have contributed to the slowdown in salary increases,” Misco director Lawrence Zammit told The Times Business.
“Maltese businesses are becoming ever more conscious of the need to maintain competitiveness and are becoming more wary of giving unsustainable salary increases.”
The study found that the IT, financial services and i-gaming sectors have had a significant impact on 2010 increases in remuneration. As Malta’s fastest growing sectors, they are witnessing a shortage of skilled and professional labour in some areas, creating pressure on wage inflation.
Mr Zammit pointed out the financial services sector in general was still experiencing growth – it was a tribute to the Malta Financial Services Authority and Finance Malta which had managed to maintain international interest in the jurisdiction despite the crisis in international markets, he said.
“There are bottlenecks in the labour market with regard to the availability of skills in this area,” Mr Zammit added. “But I would also include insurance, fund management and other activities. As a result of these bottlenecks, businesses have had to rely on imported labour. This has tended to contribute to an increase in remuneration packages. However, I would say that it is the buoyancy of the financial services sector as a whole that has, in effect, contributed to the increase in salaries, and not just foreign labour. The IT sector was affected negatively by the international recession and there has also been a change in the nature of jobs available in this sector.”
The report found above-average salaries were recorded for senior management positions – managers seemed to be still demanding higher pay packets from leading companies in the challenging business environment.
Over the past 12 months, median remuneration packages for operations, production and human resources managers were up by 1.4 per cent. Administration managers’ packages increased by 2.3 per cent; financial, technical and engineering managerial posts saw pay increases as well. Tight labour market conditions persisted for the latter posts, resulting in candidates upping their financial expectations when considering a move to new posts.
Mr Zammit said higher remuneration for senior managers over the past year suggested businesses were more willing to pay staff at these levels to avoid poaching. Misco research however revealed an increase in merit pay and performance-related pay. Companies which had a strong component of performance-related pay based on systematic approach tended to pay top managers most.
Fringe benefits fell 1.4 per cent in 2010 to an average value of 8.3 per cent. Mr Zammit pointed out that with fringe benefits being fully taxable, their attraction has faded over the last few years. Organisations were also becoming more mindful of their employees’ disinterest in certain benefits. Besides, some benefits were harder to administer.
Asked which sectors were showing slowest salary increases, Mr Zammit replied: “Essentially, in two areas: companies that have been hit worst by the international recession and those posts where availability of labour is not a problem. It is a question of supply and demand.”
Mr Zammit added salary comparison across countries was difficult to make, although not impossible. Cost of living in each country and the value of the job itself had to be factored into the equation; the same job title could entail different responsibilities in other countries which would account for dissimilar salaries.
Misco has developed its own methodology of job evaluation, a technique of measuring the value of a job – not the job holder – according to the qualifications required to do the job, to the working environment, the experience required and the responsibilities that the job entailed.
Meanwhile, the outlook for local salaries for 2011 was difficult to anticipate.
“There is still a great deal of uncertainty in the international economic environment,” Mr Zammit stressed. “Let us not forget how open our economy is. However there are still areas where a shortage of skills continues to exist. The financial services sector is still facing some severe shortages. I would add jobs with a strong component of applied IT, especially those involving a combination of IT and marketing. The growing aviation sector may experience some shortages as well.”