Labor Market Report. September Deloitte S.C. All rights reserved

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1 Labor Market Report September

2 Labor Market Report September 2016 Introduction In the following we present an overview of the labor market and the main results of the Deloitte Salary Survey, to facilitate Uruguay XXI tools to provide support in promoting and positioning Uruguay as an investment destination. The main features of the Deloitte Compensation tool are also presented; its benefits and potential for strategic decision making by organizations. Labor Market In the first semester of 2016, the main labor market indicators showed relative strength, unemployment even fell to 7.5% of the Economically Active Population (EAP) in June (after settling around 8% in January-May). Thus, while statistics in recent months consolidate the deterioration observed throughout 2015, they have not deepened. As we look to the remainder of the year and the first half of 2017, some deterioration is again observed, albeit moderate, in a context in which economic activity has been showing a poor performance, and the trend is for it to continue. 2

3 Data from January-June Employment rate: 58.6% of the working age population (WAP), recording almost one percentage point below the same period in 2015 Activityrate: 63.6% of the WAP, falling four tenths on a year-over-year basis. Unemploymentrate: 7.9% of the WAP, a value more than half a percentage point above that from January-July Real wages will continue to grow in 2016 and 2017, albeit at significantly lower rates than those seen in the last decade. Specifically, in the whole of 2016 it should increase by 2%, while in previous years, the annual average increase was 4%. Meanwhile, for 2017 we expect a rise in real wages of 1%. Real Wage Growth Rate Average annual variation 8.0% 8,0% 6.0% 6,0% 4,0% 4.0% 2,0% 2.0% Privado Private Total Public Público 2.0% 1.0% 0,0% 0.0% * * Forecast Forecasts Despite the relative stability observed in the first part of 2016, for the coming months we expect further declines in employment levels and a rise in the unemployment rate to reach values higher than 8.5% of the WAP by the middle of next year. These projections are based on the fact the Uruguayan economy will continue in difficulty (in a context of continuing macroeconomic imbalances and in which the international and regional scenario remains mostly negative). Additionally, the slowing of exchange rate adjustment increases the risks of entering more openly recessive grounds. 3

4 The following is the evolution of the annual unemployment rate as well as the projection for 2016 and 2017: Unemployment rate Annual average 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 8.4% 7.5% 7,5% 8.0% 8,0%8,4% *Information prepared by the Deloitte Financial Advisory Department Deloitte Compen$ation Total Salary Survey 2016 Our Salary Survey analyzes the current pay levels for the first half of 2016, for a total of 317 positions represented by more than 90 companies. The main characteristics of this year s sample are the following: Position Level # Positions Upper Management 16 Management 50 Team Leader / Supervisor 71 Specialists / Analyst 111 Support 69 Total 317 Company Type Multinational 43% National 48% Regional 9% Major Industries Consumer and Transportation 23% Financial Services 21% Health and Life Sciences 17% Technology, Media and Telecommunications 13% Manufacturing 13% Construction 6% 4

5 Compensation Components The compensation components analyzed in our Salary Survey reflect the Guaranteed Gross Salary, discriminating base salary on one side and other annually guaranteed components on the other; as well as the Variable Compensation and Benefits. Benefits Extra Benefits + Intangible Assets (Qualitative analysis) Variable Remuneration Target Bonus Target Incentives Guaranteed Remuneration Base Salary Complementary Annual Salary Vacation Payment Other guaranteed items Monthly Income x 12 Guaranteed Remuneration Total Remuneration Total Compensation Main Results The results in relation to the gender distribution by different position levels and the different remuneration schemes are presented below. Gender distribution by position level 53% 49% 63% 68% 77% Men Women % 48% 34% 30% 28% 47% 51% 37% 32% 23% Support Soporte Specialists Especialistas / Team Líder de Analyst Leader/ Equipo / Supervisor Management Gerencia Upper Alta Dirección Management 5

6 47% of the analyzed positions are occupied by women and the remaining 53% by men. The participation of women in the highest hierarchical levels is significantly lower than that of men. Total Compensation Mix The analyzed compensation mix in our survey considers the weight of the different remunerative items in the total compensation (base salary, guaranteed components and variable compensation). Support 76% 21% 4% Specialists 72% 18% 10% Team Leader/ Supervisor 76% 17% 7% Management 71% 15% 14% Upper Management 60% 13% 28% Sueldo Base Salary Base Otras Other Partidas Guaranteed Garantizadas Components Remuneración Variable Compensation Variable As the position in the organizational hierarchy increases, the variable remuneration appears to be an increasingly used component. With 26% of their total compensation, upper management is the position level with the highest proportion of variable its remuneration structure. Variable Remuneration While the variable remuneration is widespread among large companies in Uruguay, its weight is even lower than other countries in the region. 86% of companies had at least one variable remuneration scheme within their compensation structure. In the Uruguayan market, performance bonuses are noted as the most frequent variable component, accounting for 67% of used variable compensation tools. 6

7 In the following we present the variable remuneration schemes most frequently used by the organizations in our market: 7% 4%2% 8% 12% 67% Performance Bonus Participation in Results Commissions Short Term Incentives Other Variable Components Long Term Incentives Remuneration Information The remunerative information of certain positions surveyed in our Remuneration Survey is presented below. The values are presented taking into account the low (25), middle (50) and high (75) percentiles: Position Level Gross Monthly Salary Base (Uruguayan pesos) Low Percentile Middle Percentile High Percentile P.25 P.50 P.75 Management Chief Executive Officer/General Manager 312, , ,148 Chief Financial Officer 170, , ,338 Commercial Manager 168, , ,775 Human Capital Manager 151, , ,527 Information Technology Manager 146, , ,993 Team Leader/ Supervisor Financial 95, , ,188 Commercial 88,632 94, ,145 Human Capital 77,198 88, ,860 Information Technology 112, , ,135 7

8 Position Level ross Monthly Salary Base (Uruguayan pesos) Low Percentile Middle Percentile High Percentile P.25 P.50 P.75 Specialists / Analyst Financial Analyst 60,536 62,111 74,997 Business Analyst 51,517 56,046 59,926 Human Capital Analyst 59,268 63,449 73,069 Systems Analyst 62,933 78,136 83,213 Administrative Senior Administrative Assistant 74,293 82,920 91,474 Junior Administrative Assistant 45,511 54,59 59,386 Deloitte Total Remuneration Survey General Characteristics Deloitte Compen$ation Our Total Salary Survey provides access to detailed information on a wide range of positions, Remunerative Practices, Benefits, Market HR Policies and Practices, according to industry and company characteristics, offering the organization a flexible and customized solution to address the various challenges in terms of remuneration. External Competitiveness Benefits Internal Equity Analysis of the organization s remunerative information versus its reference market through different perspectives: Position, Position Level, Area, Company and Industry Type. Analysis and comparison of the benefits provided by the company in relation to the market, according to position level. Comparison of the contribution of each position to the achievement of organizational objectives and their remuneration. HR Policies, Practices and Indicators Detailed and in-depth information about the market s HR policies and key indicators. 8

9 What are the benefits of our Remuneration Survey? Information security Access our Remuneration Survey through a user name and password managed under Deloitte s high security standards. Access to information Access to information through different participation schemes, tailored to your interests and needs. Information without a time limit. Surveys and flexible analysis Adaptable to the needs of each client. Access to a detailed analysis: by industry, company size, type of business, economic sector. Filters that adjust the display of reports depending on the level of detail required. Regional information Standardized reports. Access to the characteristics of different markets. Trained professional team Deloitte will provide a manual and the necessary support of our professional team to facilitate the analysis of our Survey s reports on the website. 9

10 Contact Us Verónica Melián Partner Consulting Cecilia Laborde Senior Manager Human Capital Consulting Paola de Leonardis Gerente Human Capital Consulting About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte's approximately 225,400 professionals are committed to becoming the standard of excellence. 10