Mercer Helps Multinats Understand Country Pay Differences

Mercer’s Compensation Plans around the World guide for multinational organizations summarizes compensation practices and regulatory variations in more than 45 countries. The report includes remuneration practices such as typical pay components, including mandatory salary increases, cash payments for transportation, meals or holidays, number of months of pay, and frequency of salary increases.      

As multinational organizations strive to manage global employment costs, one factor that continues to pose a challenge is that of mandated salary increases. Mercer notes that in the Americas, most countries, including Canada, do not mandate salary increases. In Brazil, however, union agreements commonly dictate mandatory salary increases, while in Colombia salary increases are required only for employees making minimum wage.    

In Europe, salary increases are often dictated by collective labor agreements. While salary increases are not mandated in Finland, Germany, and Sweden, for instance, they often are included in collective agreements. Additionally, in Turkey and Denmark, salary increases are required for companies that have unionized workforces. In Greece, they are mandated only for employees paid minimum wage. Other European countries, including the United Kingdom and Poland, do not have mandated salary increases.    

Most of the countries in Asia Pacific do not mandate salary increases. Thailand, Japan, Indonesia and India are among these countries. In Malaysia, however, pay increases are required for unionized and blue collar workers.      

Besides mandated salary increases, other compensation practices that differ by country include additional guaranteed cash payments (payments provided to employees beyond salary but independent of performance) such as cash allowances for transportation, meals or holidays.    

In the Americas, there are countries that mandate additional salary payments comprising of a 13-month salary payment, holiday bonus, or profit sharing payout. In Argentina a 13-month salary payment is required by law, while in Brazil companies are required to pay a vacation bonus and provide a 13-month salary.       

In Mexico and Puerto Rico, holiday bonuses are mandated. Additionally, in Mexico profit sharing is mandatory. Transportation allowances (reimbursement for public transportation or a car stipend) are common in Brazil, Chile and Colombia, but not in the United States or Canada. Meal allowances (lunch vouchers and cafeteria meals) are mandated in Venezuela.     

Within Europe, some countries including Italy, Portugal, and Spain mandate additional salary payments. In Italy, nearly all companies provide a 13-month salary to all employees while other companies provide a 14-month salary. Portugal and Spain mandate 13-month and14-month salaries, respectively. Belgium, France and Norway mandate an allowance for transportation. While the practice of providing company cars is common in some European countries, including Belgium and Ireland, the practice is not as prevalent throughout the region as it is in the Americas.    

In Asia Pacific, some countries, including India, Indonesia and the Philippines, mandate additional salary payments. In other countries, such as Hong Kong, Singapore and Taiwan, 13 or 14 months of salary is common, while still in other countries, such as China and Malaysia, additional salary payments exist but are less common. Although a car benefit and an allowance for meals is common practice throughout many Asian countries, these pay practices are not as prevalent as a transportation allowance.