Salary survey: Consider all the variables when planning wage increases. (Spotlight).

Inflation worries may have subsided in recent years, but with real wages still roughly 4% below their 1994 levels, most employees still have some catching up to do. And recovering purchasing power through wage increases isn't easy when prices are moving slowly and there is an economic slowdown that severely pressures companies' operating margins.

AMERICAN CHAMBER OF COMMERCE OF MEXICO's "Survey of Salaries and Benefits 2002" shows that 2001 was a good year for employees despite the lackluster performance of the global economy.

RISING BEFORE THE FALL

One reason for the positive gains in salaries was, ironically, the erratic behavior of the economy. While most economists at the beginning of last year expected inflation to hover around 7.5% in 2001, weak aggregate demand and tight monetary policy helped bring inflation down to a mere 4.4% for the year. Meanwhile, wage increases averaged around 10.6% for executives, 10.9% for salaried employees and 10.9% for blue-collar workers. This translated into real gains of around 6% across the board.

While many companies budget their salary increases based on projected inflation, contract negotiations can also have a significant impact on companies with unionized workers. According to AMCHAM Human Capital and Labor Affairs Committee Chair Luis Manuel Guaida, many unions are acknowledging the virtues of maintaining jobs for their members over demanding increases that only lead to cost reductions, i.e. layoffs. Indeed, this year unions are expected to come to the bargaining table with salary increase demands closer in line with inflation expectations, says Guaida.

After last year's unexpectedly somber performance for the economy, and little hope for a significant turnaround before the second half of this year, companies plan to adjust 2002 increases accordingly. Participants in the "Survey of Salaries and Benefits 2002" said they have budgeted increases averaging 6% for executives, 5.8% for salaried employees and 5.5% for blue-collar workers. With inflation projected to close at around 5% in 2002, real wages will see negligible gains this year.

COMPARE AND CONTRAST

The "Survey of Salaries and Benefits 2002" analyzed 102 positions across a broad range of functional areas--from Finance and the Chief Executive Officer's area, to Engineering, Production, Systems and Human Resources, among others. The Survey provides a complete breakdown of data for each position, according to a company's origin of capital, geographical location, size, sector and type. Average salaries-- incorporating all of the above variables--are also provided for each position, based on the total number of companies providing data for the given position.

So how much should your executives and salaried employees be earning to keep them content--and productive--in 2002?

In Mexico City, the CEO of a company was earning an average base salary of $99,383 pesos per month at the end of 2001. In Guadalajara--a market heavily affected by the downturn in the technology industry--a CEO earned an average of $86,163 per month. In contrast, a company head in the heavily U.S.-influenced market of Monterrey earned an average monthly base salary of $127,443 last year. Taking into account your company's specific financial situation, you would want to adjust these figures by the increases cited above to get an idea of where average salaries will stand at the end of 2002.

Further down the scale, an administrative manager in Mexico City at the end of last year could expect to be earning an average base salary of $30,654 per month. Meanwhile, his or her counterpart in Guadalajara took home only $13,260 on average, and an administrative manager in Monterrey earned an average of $31,438. Again, Monterrey leads the groups, with Guadalajara at the rear.

Not surprisingly, salaries for manufacturing positions showed the same pattern among the three cities, with Monterrey at the head. As such, at the end of 2001, a head of production in Mexico City was earning an average monthly base salary of $16,717 per month, while a Guadalajara production head was earning $15,827, and one in Monterrey $24,405 per month.

Even in low-end administrative positions, salaries in Monterrey edge out those in the nation's two largest cities. A personnel assistant in the northern industrial powerhouse garnered an average base salary of $7,475 at year-end 2001, while a person in the same position in Mexico City earned an average of $6,503, and in Guadalajara an average of $5,462.

The "Survey of Salaries and Benefits 2002" is the most complete study ever prepared by the AMERICAN CHAMBER OF COMMERCE OF MEXICO. For the first time, this edition includes real data on salary levels in 14 cities throughout Mexico, including Ciudad Juarez, Cuernavaca, Hermosillo, Puebla, Queretaro, Reynosa, Tijuana, Toluca, Torreon, Villahermosa and Veracruz. Over 550 companies participated in the 2002 edition, a three-fold increase from the previous year.

Olaf Carrera is director of economic programs at the AMERICAN CHAMBER OF COMMERCE, OF MEXICO.

Compensation trends in Mexico (in pesos)

                             Monthly  Guaranteed  Non-Guaranteed
Location                 Base Salary    Benefits        Benefits

CHIEF EXECUTIVE OFFICER

Federal District              99,383      10,440          11,566
Guadalajara                   86,163       8,581           7,106
Monterrey                    127,443      13,794          12,282

OFFICE MANAGER

Federal District              30,654       4,993           2,981
Guadalajara                   13,260       1,857           1,606
Monterrey                     31,438       4,653           3,006

HEAD OF PRODUCTION

Federal District              16,717       3,092           1,607
Guadalajara                   15,827       2,582           1,316
Monterrey                     24,405       4,465           1,448

PERSONNEL ASSISTANT

Federal District               6,503       1,372             443
Guadalajara                    5,462       1,071             383
Monterrey                      7,475       1,609             453

                                Gross           Net  Cost to the
Location                 Compensation  Compensation      Company

CHIEF EXECUTIVE OFFICER

Federal District              121,390        85,375      139,654
Guadalajara                   101,851        71,725      115,933
Monterrey                     153,519       104,567      176,453

OFFICE MANAGER

Federal District               38,627        27,682       43,459
Guadalajara                    16,723        12,137       18,955
Monterrey                      39,096        27,087       43,485

HEAD OF PRODUCTION

Federal District               21,416        16,190       24,826
Guadalajara                    19,725        14,853       22,874
Monterrey                      30,318        22,211       34,486

PERSONNEL ASSISTANT

Federal District                8,317         6,644        9,448
Guadalajara                     6,916         5,320        7,728
Monterrey                       9,537         7,031       11,026

Source: Survey of Salaries and Benefits 2002