Salary growth of senior business figures must slow down, says IMI

Senior business figures must moderate their pay expectations to protect competitiveness, the Irish Management Institute (IMI) said yesterday.

As the institute's annual survey of managerial salaries revealed that pay rose 8 per cent in the year to April 1st compared with inflation of 5.6 per cent, its chief executive, Mr Barry Kenny, warned that such increases were not sustainable in a climate of stalling growth.

"The domestic economy already has a recessionary feel to it despite forecasts of moderate growth, with a significant reduction in confidence apparent and a much-eased employment market, I would therefore expect more modest increases in the coming year," Mr Kenny said.

But despite the call for moderation, more than half of the companies who responded to the survey said they were likely to increase managerial salaries this year. Some 78 per cent said they would pay average increases of 6-8 per cent in the year to April 2002.

Referring to the attack on the US, Mr Kenny added: "The environment had already shown weakness before the events on September 11th, and we now face a sharp slowdown with the crisis in the technology sector and a threatening global recession."

The 8 per cent rise in the latest survey compared with a 6.8 per cent rise in the year to April 1st 2000, when the inflation rate was 4.9 per cent.

The survey said the median salary earned by chief executives in the largest companies - i.e. those with revenues of more than €250 million (£197 million) - rose to €189,100 in the period from €185,100 a year earlier.

However, it revealed that managers in companies with revenues in the €100 to €250 million range earned less in the period than a year earlier, with a median €178,200 down from €184,000. The institute said a probable cause of this was that some companies moved to different turnover ranges, making comparisons different.

Chief executives of companies with revenues in the €50 to €100 million range earned €156,100 in the period.

Those in firms in the €10 to €50 million range earned €123,700 and those in companies with revenues of less than €10 million earned €103,500.

The survey said chief executives of the largest companies in the retail and wholesale distribution sectors earned most, at €234,362. In the largest IT firms, chief executives earned €228,394 while those in banking, insurance and finance earned €215,602.

Chief executives of semi-state companies earned salaries of up to €166,971, according to the survey. However, some chief executives of certain semi-states are known to earn more than that sum.

The largest group of the 175 organisations surveyed had revenues of €10 to €50 million. At head of function level, managers in all divisions earned salaries in the €59,043 to €94,278 range, while middle managers earned €38,092 to €62,471.

First-line managers earned €28,220 to €48,123. Such managers gained most in the survey period when compared with other managerial groups. The highest-earning managers at head of function, middle management and first-line management levels worked in information technology.

The survey said 36 per cent of companies had a company car scheme while 27 per cent had a company car policy with cash alternative. The most popular brand of company car used by chief executives was BMW, used by 17 per cent. Mercedes cars were used by 17 per cent of chief executives, while Audi and Volvo cars were used by 14 per cent of chief executives.

The survey covered the salaries of 5,104 individual managers. Government departments, universities and companies with fewer than 20 staff were not surveyed.