HEALTH WEALTH CAREER

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2017

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INTERNATIONAL GEOGRAPHIC
SALARY DIFFERENTIALS
GLOBAL EDITION

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IN TRODUCTION

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Geographic salary differences generally represent the market-driven pay variations between locations —
domestic or international. Multinational companies, with employees in different geographic areas, often
implement location pay differentials in their salary scales. Such geographic salary differentials can have

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a major impact on evaluating compensation plans for employers, who have to consider these pay level
differences when pricing the same job in different markets.
Numerous factors influence the level of pay within a country, such as the availability (supply and demand) of qualified talent. If that
talent is scarce, pay levels are higher. The competitive market also plays a significant role, and employers need to determine their
desired pay position in that market. Do they want to be perceived as aggressively competitive or just one of the peers? Some
organisations offer pay levels that may be lower than the general market, but their noncash benefit levels are higher — or the mix of

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their base salary and incentives is different than that of their peers. The general economy of the location, along with cost of living and
standard of living, affect salary levels, as well.
Another variable is the career level required to staff a new operation (or expanded one), which can also have a large impact on the
bottom line. For example, if the majority of the workforce falls into lower levels of the organisation, the variation in salary between
two locations may not be sufficiently different to influence the company’s decision either way. But other factors may come into play,
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such as the local economy, quality of living, and others. However, if higher-skilled employees are necessary — for example, engineers
— wider variations in pay between two locations may lead to total employment costs (the sum total of pay, benefits, mandatory
contributions, and other components) that could favour one location over another.
Consequently, knowing the pay levels in different locations helps employers control costs, while ensuring adequate, competitive pay
as per the respective market standards. Management may choose a lower-cost location due to significant geographic differentials
in pay — or accept the higher costs and select the initial desired location. Accurate information is key to making sound, informed,
rational decisions that align with the company’s strategic objectives and culture.

© 2017 MERCER LLC. INTERNATIONAL GEOGRAPHIC SALARY DIFFERENTIALS — GLOBAL 4

INTRODUCTION
DIFFERENTIAL’S DIFFERENT MEANING S

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Beyond the meaning of “geographic differential” as a pay difference set for the same job based on variations in cost of living or cost
of labour among two or more geographical areas, “differential” can also represent:

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►► Area differential, which is an allowance paid to compensate expatriates for medium-term cultural and hardship factors present
in the assignment country compared to the base country, or an allowance paid to domestic or expatriate employees in certain
geographic areas based on different average pay levels and/or cost of living.
►► Goods and services differential, which is the amount added to an expatriate’s compensation to protect purchasing power for the
higher cost of goods and services in an assignment location compared to the base country.
►► Housing differential, which is an allowance to compensate for differences between local host-country housing costs and the

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costs for similar housing in the base country. The allowance typically covers both rent and utilities.
►► Negative differential, which is the result when the cost of goods and services or housing is higher in the home country than in the
assignment location.

THE MOBILI T Y FACTOR

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With these definitions in mind, employee mobility is another consideration for employers when designing pay packages. Going on
assignment to a foreign city means learning a new language, tasting exotic foods, making new friends — and usually paying more for
typical goods and services. When an assignee finds the cost of living in the assignment location higher than in the home country,
the company typically provides a differential that moves up or down to make up for those higher expenses. This factor is only one in
a traditional international assignment package. With all the other add-ons for moving, housing, danger, spousal support, and other
items, the resulting cost can significantly affect the budget.
When the destination has higher costs than the potential assignee’s home country, employers have options beyond relocating the
employee and the accompanying family. Some employers hire a local-national employee. Knowing the pay level for that individual, as
long as the candidate has the qualifications and skills, could prove cost-effective in the long run. Other employers might still relocate
an employee from elsewhere, but use a modified pay package, basing it on the local salary levels.

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INTRODUCTION
However, some employee relocations involve sending an employee from a high-cost location to a low-cost location. In that case,

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there would be a “negative” differential. Beyond price, currency fluctuation and inflation complicate matters. To keep purchasing
power “whole” (comparable to home) during an assignment, the differential moves up or down to protect purchasing power, thus
equalising price differences. However, many companies ignore the negative differential that should be subtracted from the pay
package, instead allowing the assignee to keep the windfall. Others take a deduction from another allowance (such as housing) or

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total compensation, as deducting a negative differential keeps the individual’s purchasing power comparable to what was enjoyed at
home.

IMPLEMENTING DIFFERENTIALS
No matter the meaning of differential within an organisation’s pay plan, most multinational employers develop different salary
structures in different locations when there is a geographic difference in salary levels. This practice is of particular assistance in

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reducing employment costs if the number of employees in that location is significant. Other employers may choose to make individual
adjustments to base salary, which works best if there are only a handful of employees in diverse locations. And others, as is the case
for international assignees, provide supplemental differential payments with a percentage adjustment added to the employee’s base
salary.
To support clients’ need for accurate, timely salary differences in major world regions, Mercer’s 2017 International Geographic Salary
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Differentials online tool provides:
►► Information on gross pay and net pay variations across 86 countries.
►► Insights into pay levels in different countries, helping human resources professionals identify labour cost-advantages within
various locations and make equitable, competitive salary allocations.
►► Highlights of domestic geographic differentials within 17 countries, supporting employer decisions to move or hire employees
within a country.
►► Comparison of gross pay (annual total cash) and net pay for seven employee levels — executive, upper-middle management, lower-
middle management, senior professional, junior professional, skilled para-professional, and general para-professional — presenting
the spectrum of career levels.
Because economic and political conditions can change rapidly, we recommend that you consult your local Mercer office for details
before taking action based on the geographic salary differentials in this publication.

© 2017 MERCER LLC. INTERNATIONAL GEOGRAPHIC SALARY DIFFERENTIALS — GLOBAL 6

MAKING SENSE OF DIFFEREN TIAL S TABLES

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GEOGR APHIC S AL ARY DIFFERENTIALS
The following table presents an example of the salary differentials between Argentina and other countries, along with the gross pay
differences of Argentina.

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The differentials in this table are expressed as percentages. A positive differential indicates that pay in the compared country is
greater than the base country, while a negative differential indicates the reverse. To compute the pay in the compared country, add
100 to the differential and divide the result by 100. Then, multiply the resulting factor with the base country pay.
For example:
►► The gross pay of lower-middle management in Bolivia is 9% higher than their peers in Argentina, or 9% higher than USD73,490.

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ARGEN TINA — ANNUAL S AL ARIES AND GEOGR APHIC DIFFERENTIALS — MEDIAN TOTAL CASH , 2016
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MAKING SENSE OF DIFFERENTIALS TABLES
►► The net pay (married, two children) of an executive in Brazil is 3% lower than their peers in Argentina, or 3% lower than

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USD131,050.

ARGEN TINA — ANNUAL S AL ARIES AND GEOGR APHIC DIFFERENTIALS — MEDIAN TOTAL CASH , 2016

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MAKING SENSE OF DIFFERENTIALS TABLES
DOMESTIC S AL ARY DIFFERENTIALS

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The domestic salary differentials indicate how gross pay varies between several locations within a given country. The analysis includes
17 countries; the number of cities varies from country-to-country. These tables present the gross salary for seven employee levels,
in both local currency and USD, and the salary differentials for National and Prime cities. The two domestic differentials help users

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understand pay differences among different cities within a country.
For example:
►► The gross pay of an executive in the Rio de Janeiro is 3% higher than their peers in Brazil as a whole, or 3% higher than
USD172,552.

BR A Z IL – DOMESTIC S AL ARY DIFFEREN TIAL S - 2016

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MAKING SENSE OF DIFFERENTIALS TABLES
►► The gross pay of an executive in the Rio de Janeiro is 1% higher than their peers in Sao Paulo, or 1% higher than USD176,367.

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BR A Z IL – DOMESTIC S AL ARY DIFFERENTIAL S - 2016

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 REPORT
ABOUT THIS

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BOUT THIS REPORT

ABOU T THIS REPORT

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This section provides information on the methods of collecting, collating, and analysing data for this online tool. Below are notes on
exceptions and exclusions in the data and a list of data sources, relevant equations, and currency conversions rates. Readers will also
find a glossary of key terms.

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METHODOLOGY
The quality and accuracy of the International Geographic Salary Differentials online tool is based on Mercer’s globally consistent
methodology of defining pay and positions, along with a vast, country-by-country database of compensation and taxation data.
The tool presents pay differential data for seven employee levels:

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►► Executive

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►► Upper-middle management

►► Lower-middle management

►► Senior professional
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►► Junior professional

►► Skilled para-professional

►► General para-professional

Each employee level matches a position class (PC) using Mercer’s International Position Evaluation (IPE) methodology. This approach
categorises jobs into a defined number of specific PCs that represent a narrow band of positions with similar responsibility levels. The
report considers data for seven PCs (60, 57, 54, 51, 48, 45, and 42) for seven employee levels.

© 2017 MERCER LLC. INTERNATIONAL GEOGRAPHIC SALARY DIFFERENTIALS — GLOBAL 12

ABOUT THIS REPORT
MERCER ’S S AL ARY DATA METHODOLOGY

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Data are compiled from Mercer’s 2016 Total Remuneration Surveys, which gather salary data through a standardised, worldwide
survey process. The analysis presents figures from an all-industry perspective and does not consider industry-specific or regional
differences. The Mercer WIN® regression methodology calculates market statistics (quartiles, mean, and median) for each PC in a

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selected market — indicating how each organisation pays at that PC. The amount of survey data provided by each organisation does
not influence the results, as each organisation counts once in each PC.
Regression analysis is a common tool for analysing data gathered in salary surveys. When a company creates or reviews its salary
structures, regression analysis defines the level of median pay relative to a pay grade. The development of a compensation structure
from surveys helps employers offer pay levels within a range of what the outside competitive labour market would pay — without

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overpaying or underpaying employees. By comparing the company’s current structure to the market — usually on an annual basis —
compensation administrators can determine the amount of overall movement necessary to bring the current salary structure up to

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date, if required.
Typical regression analysis is useful for matching, verifying, or predicting salary levels. It displays a “regression line,” or “line of
best fit,” in a scatterplot, or mathematical “picture” of the relationship between two variables by plotting (x, y) points. Within the
scatterplot, the regression line moves through the centre of the data set, minimising the distances between the points on the line
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and the data above and below the line.
Mercer’s organisation-weighted regression methodology fine-tunes that analysis by using job level grouping or banding (more than
one line) to create multiple market regression lines. This methodology offers a better representation of different pay patterns by
employee level to account for the fact that management and executive levels have different pay patterns than professionals and
para-professionals.
Consequently, the use of banding better aligns the regression with the actual salary data. In addition, Mercer’s organisation-weighted
regression better reflects company policy and improves year-over-year consistency in survey market data. It equally weights each
organisation in the market to eliminate dominance and outliers.

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ABOUT THIS REPORT
REGRES SION METHODOLOGY RECAP

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120,000 The Mercer regression methodology
Step 1: involves four basic steps.
Actual market medians and quartiles are

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calculated for each PC Step 1: Actual market medians and
100,000
Step 2:
quartiles are calculated for each PC.
A regression line based on the
Step 2: A regression line based on
80,000 actual market medians by PC is
Base Salary (Euro)

created the actual market medians by PC is

created.

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60,000 Step 3: Quartile regression lines are

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created based on quartile-to-median
Step 3: ratios.
40,000 Quartile regression lines are
created based on quartile-to- Step 4: Data density and quality checks
median ratios are performed to ensure Mercer data
20,000 accurately represents the market.
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Data density and quality checks are performed to ensure Mercer
data accurately represents market
0
39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57
Position Class
Org Weighted Regressed 25th %ile Org Weighted Regressed Median Org Weighted Regressed 75th %ile
Org Weighted Median I Org Weighted
January 19, 2015 25th to 75th

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ABOUT THIS REPORT
EX CEPTIONS AND NOTES

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►► Data for China, Russia, Kazakhstan, and Ukraine come from only one city per country — Beijing, Moscow, Almaty, and Kiev,
respectively — represented as China–Beijing, Russia–Moscow, Kazakhstan–Almaty, and Ukraine–Kiev throughout the report
(except the domestic salary differentials section).

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►► Some of the net pay values for a married couple with two children in Australia, Ireland, Lebanon, Luxembourg, and New Zealand are
higher than gross pay. This result is due to a family allowance granted by the government in these countries. The family allowance
is higher than the total hypothetical tax amount used in the analysis.
►► An “en-dash (–)” represents the missing data points in the tables; the countries with missing data are excluded from the graphs.

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►► Statistics include only data for incumbents on the organisation’s country payroll (not expatriates), with the exception of Middle
Eastern countries, where local employment standards require otherwise.

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►► Data are unavailable in the geographic salary differentials section for general para-professionals in Denmark, Moldova, Trinidad and
Tobago, and Uruguay, and for upper-middle managers in Moldova.
►► The survey scope is different for different countries. So, the differentials are presented either by state/province, Region or by
City.
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NET INCOME AND TA X CALC UL ATIONS
Net figures used Mercer’s 2016 Personal Tax Reports and Hypothetical Personal Tax Calculator. The tax assumptions in this report
reflect typical deductions within two different modules: first, an employee who is a working individual (that is, single with no children),
and second, a married couple with two children. Some countries (for example, Canada, China, Switzerland, and the US) have
governmental subunits that impose taxes. Taxation levels vary significantly in these countries, depending on local and regional taxes.
The report applied local tax rates that represent the national average tax rate to compare differentials across countries. That is, the
analysis used local tax rates in the city of Beijing, the province of Ontario, the canton of Geneva, and the state of Illinois as selected
local tax rates for China, Canada, Switzerland, and the US, respectively.

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ABOUT THIS REPORT
C URRENCY CON VERSION R ATES, USD, AS OF NOVEMBER 4, 2016

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COUNTRY CURRENCY CONVERSION COUNTRY CURRENCY CONVERSION
AMERICAS CODE USD 1= ASIA PACIFIC CODE USD 1=

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ARGENTINA ARS 15.18 AUSTRALIA AUD 1.31
BOLIVIA BOB 6.92 CHINA–BEIJING CNY 6.72
BRAZIL BRL 3.20 HONG KONG HKD 7.76
CANADA CAD 1.32 INDIA INR 66.70
CHILE CLP 663.32 INDONESIA IDR 13,025.40

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COLOMBIA COP 2,923.58 JAPAN JPY 103.54

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COSTA RICA CRC 552.43 MALAYSIA MYR 4.17
DOMINICAN REPUBLIC DOP 46.21 NEW ZEALAND NZD 1.40
ECUADOR USD 1.00 PAKISTAN PKR 104.60
GUATEMALA GTQ 7.50 PHILIPPINES PHP 48.35
HONDURAS
MEXICO
SA HNL
MXN
22.73
18.97
SINGAPORE
SOUTH KOREA
SGD
KRW
1.38
1,125.64
PANAMA PAB 1.00 SRI LANKA LKR 146.98
PERU PEN 3.39 TAIWAN TWD 31.57
PUERTO RICO USD 1.00 THAILAND THB 35.03
TRINIDAD AND TOBAGO TTD 6.70 VIETNAM VND 22,341.99
UNITED STATES USD 1.00
URUGUAY UYU 28.15
VENEZUELA VEF 9.99

Notes: These exchange rates are rounded to two significant digits. Data in the table was prepared using higher degrees of precision.

© 2017 MERCER LLC. INTERNATIONAL GEOGRAPHIC SALARY DIFFERENTIALS — GLOBAL 16

ABOUT THIS REPORT
C URRENCY CON VERSION R ATES, USD, AS OF NOVEMBER 4, 2016, CONTINUED

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COUNTRY CURRENCY CONVERSION COUNTRY CURRENCY CONVERSION
EMEA CODE USD 1= EMEA CODE USD 1=

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ALGERIA DZD 110.11 KAZAKHSTAN–ALMATY KZT 332.25
ANGOLA AOA 165.89 KENYA KES 101.31
AUSTRIA EUR 0.91 LATVIA EUR 0.91
AZERBAIJAN AZN 1.61 LEBANON LBP 1.00
BAHRAIN BHD 0.38 LITHUANIA LTL 0.91

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BELGIUM EUR 0.91 LUXEMBOURG EUR 0.91

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BULGARIA BGN 1.77 MOLDOVA MDL 19.86
CROATIA HRK 6.80 MOROCCO MAD 9.82
CZECH REPUBLIC CZK 24.47 NETHERLANDS EUR 0.91
DENMARK DKK 6.74 NIGERIA NGN 315.92
EGYPT
ESTONIA
SA EGP
EUR
8.88
0.91
NORWAY
OMAN
NOK
OMR
8.16
0.38
FINLAND EUR 0.91 POLAND PLN 3.90
FRANCE EUR 0.91 PORTUGAL EUR 0.91
GERMANY EUR 0.91 QATAR QAR 3.64
GHANA GHS 3.98 ROMANIA RON 4.07
GREECE EUR 0.91 RUSSIA–MOSCOW RUB 62.61
HUNGARY HUF 278.06 SAUDI ARABIA SAR 3.75
IRELAND EUR 0.91 SERBIA RSD 111.47
ISRAEL ILS 3.81 SLOVAKIA EUR 0.91
ITALY EUR 0.91 SLOVENIA EUR 0.91
JORDAN JOD 0.71 SPAIN EUR 0.91

Notes: These exchange rates are rounded to two significant digits. Data in the table was prepared using higher degrees of precision.

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ABOUT THIS REPORT
C URRENCY CON VERSION R ATES, USD, AS OF NOVEMBER 4, 2016, CONTINUED

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COUNTRY CURRENCY CONVERSION COUNTRY CURRENCY CONVERSION
EMEA CODE USD 1= EMEA CODE USD 1=

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SWEDEN SEK 8.79 UKRAINE–KIEV UAH 25.72
SWITZERLAND CHF 0.99 UNITED ARAB EMIRATES AED 3.67
TUNISIA TND 2.23 UNITED KINGDOM GBP 0.81
TURKEY TRY 3.07

Notes: These exchange rates are rounded to two significant digits. Data in the table was prepared using higher degrees of precision.

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ABOUT THIS REPORT
DATA SOURCES, 2016

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COUNTRY DATA SOURCES, 2016 NUMBER OF PARTICIPANTS
AMERICAS

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ARGENTINA AR: Total Remuneration Survey (November) 437
BOLIVIA BO: Total Remuneration Survey (June) 37
BRAZIL BR: Total Remuneration Survey (May) 478
CANADA CA: Total Remuneration Survey (April) 832
CHILE CL: Total Remuneration Survey (May) 357

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COLOMBIA CO: Total Remuneration Survey (May) 345

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COSTA RICA CR: Total Remuneration Survey (June) 115
DOMINICAN REPUBLIC DO: Total Remuneration Survey (June) 59
ECUADOR EC: Total Remuneration Survey (May) 111
GUATEMALA GT: Total Remuneration Survey (June) 93
HONDURAS
MEXICO
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HN: Total Remuneration Survey (June)
MX: Total Remuneration Survey (May)
44
723
PANAMA PA: Total Remuneration Survey (May) 149
PERU PE: Total Remuneration Survey (May) 242
PUERTO RICO PR: Total Remuneration Survey (June) 52
TRINIDAD AND TOBAGO TT: Total Remuneration Survey (June) 29
UNITED STATES US: Total Remuneration Survey (March) 1440
URUGUAY UY: Total Remuneration Survey (July) 106
VENEZUELA VE: Total Remuneration Survey (May) 166

© 2017 MERCER LLC. INTERNATIONAL GEOGRAPHIC SALARY DIFFERENTIALS — GLOBAL 19

ABOUT THIS REPORT
DATA SOURCES, 2016 , CON TINUED

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COUNTRY DATA SOURCES, 2016 NUMBER OF PARTICIPANTS
ASIA PACIFIC

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AUSTRALIA AU: Total Remuneration Survey All Industries (July) 706
CHINA–BEIJING CN-Beijing: Total Remuneration Survey Office (June) 917
HONG KONG HK: Total Remuneration Survey (July) 490
INDIA IN: Total Remuneration Survey (June) 772
INDONESIA ID: Total Remuneration Survey (June) 477

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JAPAN JP: Total Remuneration Survey (June) 563

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MALAYSIA MY: Total Remuneration Survey (June) 524
NEW ZEALAND NZ: Total Remuneration Survey All Industries (July) 233*
PAKISTAN PK: Total Remuneration Survey (June) 143**
PHILIPPINES PH: Total Remuneration Survey (June) 374
SINGAPORE
SOUTH KOREA
SA SG: Total Remuneration Survey (June)
KR: Total Remuneration Survey (July)
775
496
SRI LANKA LK: Total Remuneration Survey (June) 64
TAIWAN TW: Total Remuneration Survey (July) 399
THAILAND TH: Total Remuneration Survey (June) 511
VIETNAM VN: Total Remuneration Survey (June) 554

Notes: *The 2016 counts are based on TRS Cross industries and related Supplements.
**One company has provided data only for supplement survey.

© 2017 MERCER LLC. INTERNATIONAL GEOGRAPHIC SALARY DIFFERENTIALS — GLOBAL 20

ABOUT THIS REPORT
DATA SOURCES, 2016 , CON TINUED

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COUNTRY DATA SOURCES, 2016 NUMBER OF PARTICIPANTS
EMEA

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ALGERIA DZ: Total Remuneration Survey (May) 81
ANGOLA AO: Mercer/Global Remuneration Survey:Total Remuneration Survey (April) 51
AUSTRIA AT: Total Remuneration Survey (April) 171
AZERBAIJAN AZ: Total Remuneration Survey (May) 32
BAHRAIN BH: Total Remuneration Survey (May) 52

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BELGIUM BE: Total Remuneration Survey (April) 268

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BULGARIA BG: Total Remuneration Survey (May) 226
CROATIA HR: Total Remuneration Survey (April) 77
CZECH REPUBLIC CZ: Total Remuneration Survey (April) 220
DENMARK DK: Total Remuneration Survey (June) 245
EGYPT
ESTONIA
SA EG: Total Remuneration Survey (May)
EE: Total Remuneration Survey (May)
105
61
FINLAND FI: Total Remuneration Survey (June) 219
FRANCE FR: Total Remuneration Survey (April) 503
GERMANY DE: Total Remuneration Survey (April) 516
GHANA GH: Mercer/Global Remuneration Survey:Total Remuneration Survey (June) 100
GREECE GR: Total Remuneration Survey (April) 152
HUNGARY HU: Total Remuneration Survey (April) 161
IRELAND IE: Total Remuneration Survey (April) 154
ISRAEL IL: Total Remuneration Survey (June) 54
ITALY IT: Total Remuneration Survey (April) 377
JORDAN JO: Total Remuneration Survey (May) 51
KAZAKHSTAN–ALMATY KZ: Total Remuneration Survey (April) 98

© 2017 MERCER LLC. INTERNATIONAL GEOGRAPHIC SALARY DIFFERENTIALS — GLOBAL 21

ABOUT THIS REPORT
DATA SOURCES, 2016 , CON TINUED

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COUNTRY DATA SOURCES, 2016 NUMBER OF PARTICIPANTS
EMEA

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KENYA KE: Mercer/Global Remuneration Survey:Total Remuneration Survey (July) 119
LATVIA LV: Total Remuneration Survey (May) 182
LEBANON LB: Total Remuneration Survey (May) 51
LITHUANIA LT: Total Remuneration Survey (May) 102
LUXEMBOURG LU: Total Remuneration Survey (April) 35

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MOLDOVA MD: Total Remuneration Survey (April) 15

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MOROCCO MA: Total Remuneration Survey (May) 126
NETHERLANDS NL: Total Remuneration Survey (April) 309
NIGERIA NG: Mercer/Global Remuneration Survey:Total Remuneration Survey (June) 152
NORWAY NO: Total Remuneration Survey (July) 197
OMAN
POLAND
SA OM: Total Remuneration Survey (May)
PL: Total Remuneration Survey (April)
55
410
PORTUGAL PT: Total Remuneration Survey (April) 304
QATAR QA: Total Remuneration Survey (May) 135
ROMANIA RO: Total Remuneration Survey (April) 190
RUSSIA–MOSCOW RU: Total Remuneration Survey (April) 291
SAUDI ARABIA SA: Total Remuneration Survey (May) 325
SERBIA RS: Total Remuneration Survey (April) 110
SLOVAKIA SK: Total Remuneration Survey (April) 105
SLOVENIA SI: Total Remuneration Survey (April) 60
SPAIN ES: Total Remuneration Survey (April) 371
SWEDEN SE: Total Remuneration Survey (July) 375
SWITZERLAND CH: Total Remuneration Survey (April) 263

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ABOUT THIS REPORT
DATA SOURCES, 2016 , CON TINUED

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COUNTRY DATA SOURCES, 2016 NUMBER OF PARTICIPANTS
EMEA

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TUNISIA TN: Total Remuneration Survey (May) 61
TURKEY TR: Total Remuneration Survey (May) 251
UKRAINE–KIEV UA: Total Remuneration Survey (April) 133
UNITED ARAB EMIRATES AE: Total Remuneration Survey (May) 428
UNITED KINGDOM UK: Total Remuneration Survey (April) 529

ETHODOLOGY
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ABOUT THIS REPORT
DATA SOURCES, DOMESTIC DIFFERENTIAL S FOR CHINA, 2016

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COUNTRY DATA SOURCES, 2016 NUMBER OF PARTICIPANTS
CN: Total Remuneration Changsha All Industries Survey (June) 123

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CN: Total Remuneration Chengdu All Industries Survey (July) 166
CN: Total Remuneration Chongqing All Industries Survey (July) 173
CN: Total Remuneration Dalian All Industries Survey (July) 235
CN: Total Remuneration Guangdong All Industries Survey Office (June) 694
CN: Total Remuneration Hangzhou/Ningbo All Industries Survey (July) 187

ETHODOLOGY
CN: Total Remuneration Hefei/Wuhu All Industries Survey (June) 133

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CN: Total Remuneration Nanjing All Industries Survey (June) 208
CHINA CN: Total Remuneration Qingdao All Industries Survey (July) 173
CN: Total Remuneration Shanghai All Industries Survey Office (June) 1046
CN: Total Remuneration Shenyang/Changchun All Industries Survey (July) 189
SA CN: Total Remuneration Suzhou/Kunshan All Industries Survey (June)
CN: Total Remuneration Tianjin All Industries Survey (June)
289
201
CN: Total Remuneration Wuhan All Industries Survey (July) 289
CN: Total Remuneration Wuxi All Industries Survey (June) 164
CN: Total Remuneration Xiamen/Fuzhou All Industries Survey (July) 149
CN: Total Remuneration Xian All Industries Survey (July) 329

OTHER DATA SOURCES

DATA SOURCES, 2016
Mercer's Cost–of–Living (COL) Survey, September 2016
Mercer's Hypothetical Tax Calculator, 2016
Mercer Personal Tax Report, 2016
Mercer's Quality–of–Living (QOL) Survey, September 2016

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ABOUT THIS REPORT
COMPENS ATION TERMS

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ANNUAL BASE SAL ARY ( ABS ) company superannuation associated with fixed cost, car
Monthly base salary multiplied by the number of months per year parking, leave loading, and all other benefits and associated
that salary is paid (according to company policy). fringe benefit tax. It excludes STIs and long-term incentives,

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staff on-costs such as workers’ compensation and payroll tax,
bonuses, and/or commissions, and superannuation associated
ANNUAL GUAR AN TEED CASH ( AG C ) with variable cost.
Annual base salary plus guaranteed allowances, which include
meal allowance, vehicle allowance, and so on.
ALLOWANCES
Salary supplements paid to employees to cover job
ANNUAL TOTAL CASH requirements, with reimbursement usually based on actual

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COMPENSATION ( ATC ) costs. Typical allowances, depending on country or company
Annual base salary (ABS) plus annual guaranteed cash (AGC) and culture, might include allowances for maternity, festival,
short- term incentives, which include bonus (for example, bonus, transition, meal, car, childcare, family, vacation, sickness,
sales commission, profit sharing) but exclude share options. The housing, and others. They can be either paid out in cash, as
figures reported include the actual award amounts received an addition to the base salary or in the form of vouchers or
over last 12 months.
SA coupons and may vary significantly from country to country.

ANNUAL TOTAL REMUNER ATION COMPENSATION MANAGEMENT

The process of engaging with line managers regarding their
(ATR ) recommendations for individual pay increases and bonuses. It
Annual total cash (ATC) plus long-term incentives. Also known as
relies on managers being guided towards fair and consistent
Annual Total Direct Compensation.
awards with robust market data and being enabled using
technology. Approaches vary from directional (limited manager
ANNUAL TOTAL EMPLOYMENT CO ST discretion) to discretionary.
(TEC)
The total fixed cost of an employee’s package to the employer,
including base salary, allowances, motor vehicles (benefit
vehicles only), car allowances (benefit allowances only),

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ABOUT THIS REPORT
COMPENS ATION PL ANNING EQUI T Y

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The process of modelling company and market data to build
insights into how budgets should be distributed within the E X TERNAL EQUI T Y
company for compensation review. It may be a top-down A measure of an organisation’s pay levels, bands, or “going
process linked to affordability and market movement, or a market rates” compared to that of its competitors. As a fairness

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bottom-up process linked to competitive position and individual criterion, external equity implies that the employer pays
performance, or both. Also see Salary Increase. wages that correspond to prevailing external market rates, as
determined by market pricing.
COMPENS ATION STR ATEGY/ INTERNAL EQUI T Y
PHILO SOPHY/POLICY A fairness criterion that directs an employer to establish
The principles that guide the design, implementation and wage rates that correspond to each job’s relative value to the
organisation.

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administration of an organisation’s compensation programme.
The strategy ensures that a compensation programme,
consisting of both pay and benefits, supports an organisation’s EX TERNAL COMPETI TIVENES S
mission, goals, and business objectives. It may also specify what A comparison of the organisation’s pay structure with its
programmes will be used and how they will be administered. competitors.
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The philosophy ensures that a compensation programme
supports an organisation’s culture. The policy ensures that FIXED ALLOWANCE
a compensation programme carries out the compensation See Allowances.
strategy while supporting the compensation philosophy.
FULL - TIME EQUIVALENTS (F TES)
COMPETI TIVE PAY POLICY The number of full-time equivalent (FTE) employees includes
The strategic decision an organisation makes about which locals, local plus, expatriates, union personnel, and contract
labour markets to use as comparison groups and how to set pay staff. Seasonal staff are not included. An FTE of 1.0 is equivalent
levels for those groups. After choosing the comparison group, to a full-time worker, while an FTE of 0.5 signals half of a
the organisation decides its market position with respect to the full-time worker.
group.
GEOGR APHIC DIFFEREN TIAL
A pay difference set for the same job based on variations in
cost of living or cost of labour among two or more geographical
areas.

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ABOUT THIS REPORT
GUAR ANTEED CASH ALLOWANCES LONG-TERM INCENTIVE (LTI)

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Cash allowances that are guaranteed to the employee Variable pay based on measures that extend for a period of
regardless of their performance. Also see Allowances. more than one year. Their role is to link the financial rewards
of executives and, increasingly, broader levels of employees to
GROS S PAY the organisation’s long-term performance. They include stock/

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The total amount of money earned by an employee in a specific share options, stock grants, deferred cash compensation,
period, before tax and other deductions. Also see Net Pay. equitybased, and cash plans.
►► Performance Cash Units: Conditional grant denominated
INCENTIVES in units other than notional or actual shares, with payment
contingent upon achievement of specified performance
SHORT - TERM INCEN TIVE ( STI) goals over a multi-year performance period. They are
Rewards relating to the performance against selected criteria cashdenominated and not tied to the price of a share of

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over a period of one year or less. These include performance stock. Although units are usually cash-denominated, their
related bonuses, sales bonuses, sales commissions, value may also be based on other constructs, such as
profitsharing schemes, other bonuses, and exceptional dividends or earnings per share (EPS). Where the value of
premiums. each unit is equal to 1, the incentive type is also known as
“long-term cash.”
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►► Actual Short-term Incentive: The performance-based
variable bonus amount paid out in the previous 12 months. ►► Performance Share Units (PSUs): Conditional grant of
This figure may be provided as a percentage of annual base notional or actual shares, with payment or vesting contingent
salary or the actual award amount. upon achievement of specified performance goals over
a multi-year performance period. While the number of
►► Target Short-term Incentive: The performance-based
performance shares/share units earned depends on the
variable bonus amount targeted to be paid for the upcoming
extent to which the performance goals are achieved, the
year. This figure is displayed as a percentage of annual base
value of each performance share/share unit depends upon
salary.
the market value of the share at the end of the performance
►► Maximum Short-term Incentive: The maximum or capped period.
performance-based variable bonus amount. This figure is
displayed as a percentage of annual base salary.
►► Percentage Receiving: The percentage of employees that
received a short-term incentive in the prior year.

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ABOUT THIS REPORT
►► Restricted Share Units (RSUs): Conditional grants of notional, LONG - TERM CASH

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actual or phantom shares of stock with vesting contingent A pre-determined cash amount paid out contingent upon
upon employment for a specified period. The value of each achievement of specified performance goals over a multi-year
share depends upon the market value of the share at the end performance period.
of the vesting period.

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►► Share Appreciation Rights (SARs): SARs provide an incumbent MARKET PRICING
with the appreciation in market value of the share. They The technique of creating a job-worth hierarchy based on the
may be paid out in cash, stock, or a combination of cash “going rate” for benchmark jobs in the labour market(s) relevant
and stock, with no investment on the part of the incumbent to the organisation. After a preliminary hierarchy is established
required. They include phantom appreciation shares, which based on market pay levels for benchmark jobs, this method
are awards denominated in hypothetical shares, the value considers job content to ensure internal equity. The process
of which is based on an increase in actual share value or then “slots” all other jobs into the hierarchy based on whole job

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another measure of organisation value (e.g., book value). comparison.
There are three types of SARs:
NET PAY
►► Freestanding — SAR grant that is not attached to a stock/ The cash-in-hand of an employee, after tax and other
share option. deductions. Also see Gross Pay.
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►► Limited — SAR that is exercisable only upon the
occurrence of a specific event, such as a change in S AL ARY INCRE ASE
control. The total increase to salary that may include cost-of-living/
inflation and merit increases in the financial year and exclude
►► Tandem — SAR that is granted with a stock/share option. promotion and/or market adjustment.
The exercise of one cancels the other.
S AL ARY INCREASES EXCLUDING ZEROES
►► Stock/Share Options: The right to purchase company shares Excluding zeroes represents salary increases of companies that
at a stated price (exercise price) for a defined period (option provide an increase in pay (excluding pay freezes).
term). The exercise price is typically equal to the market
price on the grant date, but may be less than or greater than S AL ARY INCREASES INCLUDING ZEROES
the market price on the grant date. Including zeroes represents salary increases of all companies,
including those with pay freezes.

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ABOUT THIS REPORT
REAL SAL ARY INCRE ASE T URNOVER

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An increase in salary after factoring in the effects of inflation on
purchasing power. VOLUNTARY T URNOVER
The percentage of employees who resigned voluntarily during
S AL ARY R ANGE the 12-month reporting period, excluding normal retirement.

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The established annual range for a position (minimum, control This does not include contractors or volunteer staff.
point, maximum) reported only for those organisations that have
a formal salary structure.See pay range. IN VOLUNTARY T URNOVER
The percentage of employees who were retrenched or
SAL ARY R ANGE MINIMUM dismissed by the organisation during the 12-month reporting
The established minimum (lowest) rate of the salary range for period. This includes contract staff that were retrenched or
the position. dismissed outside the terms of their contract (that is, it does
not include contract staff that left the organisation merely

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SAL ARY R ANGE MA XIMUM because their contracts expired). All redundancies are under
The established maximum (highest) rate of the salary range for involuntary terminations, regardless of whether they were
the position. voluntary or involuntary redundancies.

VARIABLE CASH
SAL ARY STRUCT URE
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The hierarchy of job grades and pay ranges established within an The amount of nonfixed cash, or variable pay, which is a reward
organisation that may be expressed in terms of job grades, job based on individual, group, or organisational performance rather
evaluation points, or policy lines. than time spent on the job or the job’s value.

S AL ARY STRUCTURE ADJUSTMEN T

An adjustment in the salary structure expressed as the
percentage by which the sum of all midpoints of the new
structure exceed (or lag) the corresponding sum of the
midpoints of the old structure.

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ABOUT THIS REPORT
EMPLOYEE CAREER LEVELS

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EXECU TIVE MANAGEMENT/LOWER-MIDDLE
These senior-most employees in the organisation generally
include top executives and directors within the organisation, or
MANAGEMENT

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These employees with important supervisory and managerial
employees with managerial responsibilities at the top level of
responsibilities are usually the higher levels within a business
a business unit or organisation. Executives focus on providing
unit or organisation. Management-level employees focus on
strategic vision and/or tactical/strategic direction across
managing people and implementing policies and strategies to
multiple functions or sub-functions. May also be referred to
meet the organisation’s objectives. They typically report to
as Senior Executive or Function Head, or in the case of a sales
senior managers and (other than sales) functional managers
executive Head of Sales/Marketing.
including finance, human resources, information technology.

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SENIOR MANAGER / UPPER - MIDDLE PROFES SIONAL
MANAGEMENT Typically refers to jobs requiring a professional or technical
These employees direct the business activities for the qualification. They are individual contributors without
achievement of short- and long-term business/policy objectives supervisory responsibility, but may provide coaching/mentoring
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and increased profit/market share. They participate in the to less-experienced staff. They typically hold a university
establishment of the policies and programme within the context degree or full-trade equivalent.
of the overall corporate/division goals and, where appropriate,
recommend standards and set targets (may include sales, PROFES SIONAL — SENIOR
marketing, distribution, and administration). They may be heads Individual contributor who is fully proficient in applying
of departments in large companies or heads of functions in established standards; knowledge acquired from several years
smaller companies. of experience in particular area. Works independently; may
mentor or coach other professionals.

PROFES SIONAL — JUNIOR

Individual contributor who works under direct supervision.
May be entry level or have limited experience in their field of
expertise.

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ABOUT THIS REPORT
PAR A - PROFES SIONAL

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Typically includes roles that are semi-skilled or unskilled with no
supervisory or management responsibility. They do not require
a university degree, but may require formal professional training
and certification, and may be paid on an hourly or a salaried

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basis.

PAR A - PROFES SIONAL — WHI TE COLL AR/

SKILLED
This category refers to salaried employees typically in a
business support, analyst, administrative, or technical role.

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PAR A - PROFES SIONAL — BLUE COLL AR/
GENER AL
Para-professional blue collar refers to production workers
generally in the manufacturing sector. Collective agreements
may or may not cover operations employees.
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ABOUT THIS REPORT
MERCER ’S TOTAL ►► Impact and contribution to business unit results

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►► Communication
REMUNER ATION SUR VEYS
►► Innovation
( TRS )

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Mercer conducts TRS in more than 100 countries. Each TRS ►► Required knowledge
includes data for a set of core benchmark positions and, in many Risk is an optional factor that may be used in high-risk industries
markets, industry-specific positions such as consumer goods, or professions. Each factor is divided into degrees, which have
pharmaceuticals, and high-technology. Mercer’s TRS allows individual weightings. The system facilitates a review of positions
access to market data for pay and benefits, as well as the ability within a company, as well as across companies and industries.
to generate statistics tailored to an organisation’s needs via
Mercer’s online delivery tool, Mercer WIN®.
PO SI TION CL AS S TERMS

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Position class (PC) is the Mercer level created using Mercer’s
MERCER’S INTERNATIONAL International Position Evaluation (IPE) system. Typical PCs for
POSI TION EVALUATION ( IPE ) SYSTEM different employee levels are:
Mercer surveys around the world are based on the International
►► Executive: PCs 57–62
Position Evaluation (IPE) system. IPE relies on evaluating
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positions, not the employees holding those positions — because ►► Management: PCs 52–57
the qualifications and performance of incumbents can differ
from what positions actually require. Position evaluation is not ►► Professional: PCs 47–52
just a tool for salary comparisons, but is also instrumental in ►► Para-professional: PCs 42–47
recruiting, career planning, designing corporate structures, and
dealing with expatriate compensation and planning. SAMPLE JOB TI TLES
Executive (PCs 57–62): Head of Organisation, Head of
Pay data within each country matches the core benchmark
Operations, Head of Legal, Head of Human Resources, Head
position structure, using Mercer’s IPE methodology — ensuring
of Communications, Head of Finance, Head of Information
that position levels are consistently and accurately matched, Technology, Head of Sales & Marketing, Head of Business
regardless of the country or industry. The IPE focuses on four Development, Head of Engineering, Head of Manufacturing Head
dimensions: of Supply Chain, Head of Quality

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ABOUT THIS REPORT
Management (PCs 52–57): Compliance Manager, Human MERCER ’S UNIVERSAL POSI TION

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Resources Manager, Employee Relations Manager, Payroll
Manager, Finance Manager, Credit & Collections Manager, CODE SYSTEM ® (MUPC S)
Accounting Manager, Budget Manager, IT Manager, Information Mercer’s MUPCS framework is a sophisticated, flexible position
Security Manager, Business Development Manager, Marketing coding system used globally in Mercer TRS. Designed to reflect

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Manager, Customer Service Manager, Purchasing Manager accurately how a company’s structure works around job families
and career levels/progressions, the MUPCS framework is a
Professional (PCs 47–52): Public Relations Professional, robust methodology that allows consistent benchmark coding
Legal Counsel, Human Resources Generalist — Specialist, when analysing pay across borders. The “smart” aspect of
Human Resources, Compensation Analyst, Benefits Analyst, MUPCS (for example, families, subfamilies, career streams, and
Accountant, Database Administrator, Marketing Analyst , Sales levels) lets users analyse remuneration trends and relationships
Representative, Channel Sales Representative, CAD Drafter, beyond the traditional one-dimensional perspective of “jobs.”
Environmental Engineer

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Para-professional (PCs 42–47): Legal Assistant, Payroll Clerk,
Cashier, Accounting Clerk, Executive Secretary, Secretary,
Administrative Assistant, Security Guard, Receptionist, Personal
Driver, Marketing Assistant, Customer Service Representative,
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Carpenter, Production Worker, Warehouse Clerk

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ABOUT THIS REPORT
MOBILI T Y TERMS

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COST- OF-LIVING INDE X ME AN- TO- ME AN INDE X
A ratio that reflects the differences in cost of living between A comparison of the mean prices (the average of the price
two locations. The results are available in an index format, with range of each item) in the base city to host city. As a result,

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the base city at 100 index points. The index compares mean this index is not biased and is the best indicator of overall
prices (the average of the price range for each item) in the differences in prices between two cities, as it compares the
base city to that of the host city; differences are measured by average price range for each item both at home and abroad.
comparing the prices of the same market basket everywhere.
It can vary according to the market basket and calculation NEG ATIVE DIFFERENTIAL
methodology used. The market basket of goods and services The result when the cost of goods and services or housing is
includes carefully selected items, consumed both at home and higher in the home country than in the assignment location.

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abroad. For example, the goods and services index would be less than
100, so that an index of 80 means that costs in the assignment
G OOD S AND SER VICES location are 20% lower than those in the home country. See
differential, goods and services differential and cost-of-living
DIFFEREN TIAL allowance.
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The amount added to an expatriate’s compensation to protect
purchasing power for the higher cost of goods and services in
an assignment location compared to the base country.

GEOGR APHIC DIFFERENTIAL

A pay difference set for the same job based on variations in
cost of living or cost of labour among two or more geographical
areas.

HOUSING DIFFEREN TIAL

An allowance to compensate for differences between local
host-country housing costs and the costs for similar housing in
the base country. The allowance typically covers both rent and
utilities.

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ABOU T MERCER

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At Mercer, we make a difference in the lives of more than 110 million people every day by advancing their health, wealth, and careers.
We’re in the business of creating more secure and rewarding futures for our clients and their employees — whether we’re designing
affordable health plans, assuring income for retirement, or aligning workers with workforce needs. Using analysis and insights as
catalysts for change, we anticipate and understand the individual impact of business decisions, now and in the future. We see people’s

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current and future needs through a lens of innovation, and our holistic view, specialized expertise, and deep analytical rigor underpin
each and every idea and solution we offer. For more than 70 years, we’ve turned our insights into actions, enabling people around the
globe to live, work, and retire well. At Mercer, we say we Make Tomorrow, Today.

Mercer LLC and its separately incorporated operating entities around the world are part of Marsh & McLennan Companies, a publicly
held company (ticker symbol: MMC) listed on the New York, Chicago, and London stock exchanges.

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For further information, please contact your local
Mercer office or visit our website at
www.imercer.com

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