The Grey Chronicles

2009.February.21

How Much Are You Earning?


With GSPI on plant shutdown due to the current global crises, I recently received a text message asking: “How much are you earning now? Would you consider getting a job in Davao City?”

On November 2005, when I took a job with GSPI, then known as Global Steelworks International, I was given a salary rate based on my last year with NSC, i.e. in 1999. During NSC era, there was the so called salary levels, predicated with L for staff, supervisory and managerial personnel; while D was used for daily-wage Rank-and-File [R&F]. Supervisory started with L6 to L9 for SICs and Senior Supervisors, while managerial staff commenced with L10 for Assistant Manager.

When GSPI reopened NSC in 2004, it tapped most of its employees from the retrenched NSC personnel with starting salaries based on the NSC’s salary structure circa 1999 premised on the fact that the ex-NSC personnel, although had accumulated steel-related work experience, BUT were older. It was billed as “Take it or leave it” offer. In December 1999, the Dollar to Peso exchange averaged: 40.623. By January 2004, the Dollar to Peso jumped to an average of 55.526, and when I was hired in November 2005, the dollar strengthened at 54.561 to the peso.

The Loop-Sided Salary Increases?

The Loop-Sided Salary Increases?

The bars show the equivalent annual pay in dollars. Although ex-NSC employees were numerically receiving the same salary rates in November 1999 (when NSC closed) and November 2005 (the month I was hired), the decline in monetary value is too obvious to ignore! The peso, compared to the US dollar, depreciated from 40.623 in 1999 to 54.561 in 2005 — almost 14 basis points.

Salary Comparison Chart

Salary Comparison Chart

Between 2005 and 2008, although the SICs &#151 both the former NSC SICs and NSC Managers acting as SICs — were given a 74% salary increase, the Expats hired as SICs received a 100% increase. Thus, by the end of 2008, the former NSC SICs, still SICs of GSPI, although earned almost 50% salaries higher than the highest paid rank-and-file personnel, while the Managers hired as SIC gained a 100% higher salaries than former SICs. With regard to 2008’s salaries for expats SIC, these were 150% greater than local SICs, also former NSC SICs, or 25% greater than former NSC Managers acting as SICs.

Steven McManus (2008) explains that most countries adopt a two-tier Pay Market, typically an Expatriate Market and a Local Market. Also, it is quite normal to have considerable differences between Expatriates doing exactly the same job, in the same country. These differences are caused by these factors:

The Cost of Living difference between the Home Country (country of origin) and Host Country (where they work). The Relative Hardship difference between Home and Host Country. For example, moving to a country where more day to day hardship will be experienced, would normally result in more pay to compensate for the hardship. The Exchange Rate difference between the Home and Host Country. On the other hand the Local Market is largely determined by local supply and demand for skills. ”

Cost of Living Index

Cost of Living Index

When GSPI expats came in 2004 to the Philippines, the cost of living in New Delhi was pegged at 91.98, Mumbai at 66.8, compared with Manila at 92.27, unfortunately there is no available data for Iligan City. New York is the benchmark at 100. By 2008, according to Mercer, LLC, Mumbai ranked 48th from 52nd in 2007, with the cost of living index at 90.3 from 84.9; while New Delhi scored 87.5; thus living in New Delhi is much cheaper than in Mumbai. Manila ranked 110th with a score of 73.4. Many of us know that living in Iligan is much cheaper than in Manila.

Recent survey on Cost of Living index survey (2009), however, reveals that Manila ranked 126 at 82.07 while Mumbai ranked 171 at 76.04. Meaning that early this year, it became apparent that living in Manila is much more expensive than Mumbai. Coleman explained:

“The ongoing impact of the credit crisis, slowing global economies, falling house prices, global stock market and exchange rate volatility, together with the US dollar and Euro strengthening against most currencies are all factors contributing to a major change in relative salary purchasing power.”

It’s been said that salary and job security are equally important. Companies must recognize that it has a responsibility to its employees as well as making a profit. The success of a company is directly related to the people they employ and how well these people do their job. Moreover, some believe job security is not a responsibility limited to the employer. With the expansion of the global economy, companies find it very difficult to provide job security even though it is more important than salary itself. As a company is not able to provide job security, it is up to the individual employee to keep up with the latest technologies, application tools, methods, and procedures. I believe that we have to be responsible for our own job security rather than depend upon the company. Thus, my search for a high salary with ample job security is still open for negotiation.


Notes:

Exchange Rates based on Interbank, Median Bidding Rate per trading day as published by World Currency Exchange Rates and FXHistory.

Coleman, Steven (2009) International Cost of Living Trends 2009 Online: Online: ArticleBase, 30 January 2009. back to text

McManus, Steven (2008). What Makes Expatriate Pay Different to Local People?. Online: ArticleBase, 29 March 2008. back to text

Mercer Human Resource Consulting (2004) Cost of living survey 2004 index summary Online: Mercer LLC, 2004. back to text

Métral, Nathalie Constantin (2008) Mercer’s 2008 Cost of Living survey highlights Online: Mercer LLC, 24 July 2008. back to text

United Nations (2004) Cost-of-Living Survey Report: New Delhi, India, April 2004 Online: United Nations, 01 September 2004 back to text

United Nations (2004) Cost-of-Living Survey Report: Manila, Philippines, September 2004 Online: United Nations, 01 January 2005 back to text

Disclaimer : The posts on this site are my own and doesn’t necessarily represent any organization’s positions, strategies or opinions.

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