Earnings rise gives directors a taste of the feelgood factor

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The Independent Online
The elusive feel-fantastic factor is thriving among Britain's company directors, who enjoyed a 9 per cent jump in earnings last year, more than three times the rate of inflation. The respected National Management Salary Survey, published today by the Institute of Management and Remuneration Economics, also points up a significant improvement in the lot of women in senior business positions.

The biggest surge in earnings was found among the senior executives of companies with turnover of more than pounds 600m. They enjoyed average increases of 14.5 per cent in the year to January 1996, way ahead of the 4.7 per cent rise given to managers generally.

Managers and directors not only soundly beat inflation, they also fared better than the population as a whole, since the average earnings index was up 3 per cent over the period.

The first evidence of a shift in demand away from temporary to permanent staff emerges today in a separate survey by a leading employment agency. While requests for temps from employers have fallen for the first time in four years, the demand for permanent staff has risen, the Reed Employment Index showed.

The data could form the first indication that the long-term trend away from full-time jobs has run its natural course as the economy improves.

The Management Salary Survey, which claims to be the largest of its kind, covering 24,000 individuals in nearly 300 organisations, showed the proportion of managers who are women rose from 10.7 per cent to 12.6 per cent - suggesting that the surprising fall to below 10 per cent of two years ago was a statistical blip. The proportion of female executives rose from 3 per cent to a record 3.3 per cent.

Roger Young, director general of the institute, who has long campaigned for women to be given a bigger role in business, said he was encouraged by the continuing progress made at all levels. However, he added: "Women make up half the workforce, yet less than 5 per cent of the boardrooms. This is hardly equality. It is time for business to recognise women's management credentials."

Female managers received exactly the same salary increases as their male counterparts, while female directors received slightly less than males. However, in each category the average female is younger than her male equivalent.

The average female manager is aged 37, earns pounds 30,569 and has been with the organisation for 11 years, while her male colleague is 44, earns pounds 34,855 and has been there for 17 years. The average female director is aged 41, earns pounds 71,638 and has been with the organisation for nine years, while the male counterpart is 48, earns pounds 88,390 and has been there for 14 years.

The Reed index for temporary workers gives the figure of 136 for the first quarter of this year, a decline of one point from its peak of 137 in the last three months of 1995. That it is still 21 per cent above the high in the economic boom of 1989.

It is the first time that the Reed Temporary Index has fallen since the fourth quarter of 1992, when it declined to 72, some two points lower than the previous three months.

In contrast, the index for permanent workers has risen by three points to reach 69 in the first quarter of 1996. This figure is nearly two and a half times above the low point in the recession - the last three months of 1992 when it stood at 28.

Alec Reed, executive chairman of Reed Personnel Services, points out that demand for temporaries remains close to its historic high, demonstrating that employers needed flexibility. "However, the rising demand for permanent staff shows that employers are beginning to feel able to plan for the longer term."

The Management Salary Survey said bonus payments have had a considerable effect on directors' earnings in the past 12 months. More than 60 per cent received bonuses, with the average bonus representing 18.8 per cent of salary, compared with 15.9 per cent a year ago. In cash terms, the value of the average bonus grew 27.7 per cent, from pounds 10,957 to pounds 13,996. Nearly 85 per cent of bonus payments were linked to company performance.