The wage gap



THE social pressure increases whenever the topic of high salaries earned by company CEOs, bank managers, heads of public utilities and consultants of government departments is brought to light.

Do their salaries match the pay scale in advanced countries? Do our salaries fall within the global average? Before we address these questions, we need to realize that high salaries are a worldwide phenomenon and they keep on increasing.

However, what needs further elaboration is the gaping difference between the salaries of executives and ordinary workers.

American researcher Sam Pizzigati pointed out that the salary gap between workers and executives in the United States widened five times since the 1980s.

In his book “The Case for Maximum Wage,” which was released last May, Pizzigati pointed out that the average employee needs to work three centuries continuously to earn what his or her executive manager earns in a year alone.

In countries like India, this gap is widening and it is showing no signs of relapse. The employee puts in long hours compared with his manager. The wage disparity becomes much clear when we consider the fact that the executive manager who works for only eight hours to earn what an average employee earns in a whole year.

When classifying the salaries of 25 top executive managers in a country like Russia, Forbes found that the average annual salary of an executive manager was $6.1 million while that of an ordinary employee was a mere $8,040.

Dr. Ethan Rouen, assistant professor of business administration in the Accounting and Management Unit in Harvard Business School, commented on this issue saying what was paid to Tim Cook in Apple Company was 250 times more than the average annual salary of an American employee. He said these companies were legally bound to reveal the value of the salaries of their executives and the additional benefits they enjoyed. They also must give an explanation to the huge gap that existed between the salaries of their employees.

Despite the differences in salary scales between Saudi Arabia and the industrialized countries, the most important sticking point here in the Kingdom is that the wage is never linked to the performance level of an employee or the profits generated by a company.

At the same time, salaries in Saudi Arabia do not conform to the detailed classifications and standards in countries that classify managers and companies.

The second issue is that there is no general classification of salaries in the country. There were very few studies and researches in this regard.

There were very few attempts to compare the average annual increase in the salaries in Saudi Arabia with the global average or the average annual salaries of company executives with that of their employees.

There is no study that compare the salary structure in the private sector with that of the public sector. There is also no link between salaries and the cost of living. Collaborated efforts between the Ministry of Civil Service, Ministry of Labor and the chambers of commerce are needed to carry out a field study on the realities of wages in the Kingdom.