Salary gap widening in Indonesia: Study | The Daily Star
12:00 AM, May 20, 2008 / LAST MODIFIED: 12:00 AM, May 20, 2008

Salary gap widening in Indonesia: Study

The gap in salaries between managers and clerics in Indonesia widened last year from 2006 in part because of a shortage in talent amid the country's growing economy, a global study says.
The finding, released by global consulting company Hay Group, takes into account compensations and benefits of 12 million employees in 61 countries, including 71,000 employees in Indonesia working in large multinational and local firms.
The disparity rate rose from 8.7 per cent in 2006 to 9.1 per cent last year, placing Indonesia's rate 8th highest out of 11 countries. The study shows the gap is widest in telecommunications and banking industries -- both fast growing sectors in Indonesia.
Michelle Low, the company's regional marketing manager in Singapore, told The Jakarta Post the gap was mainly driven by a lack of skilled labour to support the country's high economic growth.
"It is not that Indonesian managers demand high salaries, but companies competing with each other for a limited pool of experienced and skilled managers have driven up their salaries," Low said.
"As more companies in Indonesia adopt a pay-for-performance approach, the situation is becoming more balanced. Companies are able now to better measure their ROI (return on investment) for their salary budgets, while managers know what they are being paid to achieve."

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