Global MBA Salary Levels on the Rise

For candidates with a keen eye on their MBA salary, the 2013/14 QS TopMBA.com Jobs & Salary Trends Report contains plenty of good news. The global survey of 4,318 actively hiring MBA employers reveals that salary and bonus levels are up nearly across the board this year.

The strongest growth in MBA salary and bonus levels occurred in emerging markets. An 8% increase in the Asia Pacific region, from $78,434 to US$85,076, is the standout figure, while the Middle East and Africa region saw a 5% increase from US$72,540 from US$76,457. Latin American salary and bonus levels remained stable at US$72,234, though with a 20% rise in average salary occurring between 2011 and 2012, this cannot be considered a negative outcome.

However, despite this strident growth, the increased totals are still eclipsed by the equivalents in the traditional powerhouses of the US & Canada and Western Europe. Both saw a 4% rise in MBA salary and bonus levels this year, with average levels now standing at US$109,200 and US$105,900.

While 4% might be considered rather modest for these markets, the subsiding threat of further recession means that we could well see a marked improvement next year.

The story was less positive in Central and Eastern Europe, however, which was the only region in which a decline occurred; this year’s figure of US$72,109 represents a 5% drop on 2012’s.

As in previous years, the country with the highest MBA salary and bonus figure was Australia (US$133,100) followed by Switzerland (US$129,700), with Denmark climbing several places to take third spot (US$121,400).

Perhaps the most obvious cause of this largely upward trend is a gap between supply and demand. While employer demand has tripled since 2000, there has been no equivalent expansion in the size of the graduating cohorts of top business schools. Increased numbers of MBAs in hiring positions, whose experience allows them to better understand the value of the MBA, have also played their part.

Base salary levels bolstered by bonuses

Over the past decade, the annual QS TopMBA.com Jobs & Salary Trends Report has shown great year-on-year stability in base salary levels. It is the considerable bonuses on offer to MBAs which have been the primary driver of growth. As well as traditional performance-related bonuses, many employers are offering new hires sign-on bonuses to help cover MBA tuition fees.

The average first year bonus offered by MBA recruiters in Western Europe stands at a not inconsiderable US$14,000, while in the US & Canada region employees can expect no less than US$18,000. The highest reported bonus in the 2013/14 report is a gargantuan US$250,000.

These two regions also continue to stand head and shoulders above the rest of the world in terms of average base salary levels, which have risen 10% over the past decade to stand at US$90,930; they are still, however, lower than their 2008 peak of US$95,250.

Though it is some way behind, Asia is the standout region in terms of salary growth with base salaries growing by 8% to US$71,635. The figures that contribute to this average base salary vary greatly however, with salaries offered in Australia and Japan standing at roughly five times that of economies of South East Asia, where MBA salary levels are among the world’s lowest.

Despite there still being a very significant difference in base salary levels between regions, the gap between the bottom (Latin America) and the top (US & Canada) has closed over the past decade, from 50% to 30%.

The report considers salaries offered by both multinational and domestic employers. In every region, the former offer considerably higher base salaries than the latter. The difference is greatest in Asia, where it is 27%. In Western Europe it is 12%, and in the US & Canada it is 13%. The reasoning behind this is clear: as business continues to become increasingly global, multinational companies do not want to drive candidates away from regions which are set to become key.

Finance and consulting salaries no longer lead the way

The report also breaks down salary and bonus levels for the US & Canada and Western Europe down by industry, which makes for some interesting findings. Elite level finance and consulting salaries and bonuses are on the up – top consulting salaries are in the US$110-130,000 range, while salaries offered by investment banks can reach up to US$200,000 (though the range has widened, with some banks reining in compensation to around US$90,000).

However, while a decade ago, these industries offered MBA salaries as much as 50% higher than other sectors, they no longer lead the way. The highest paying field in these two regions is metals and mining, in which MBA salary levels stand at US$139,600, onto which we can add an average bonus of US$51,600 to take the total to a princely US$191,200. Last year’s leader pharmaceuticals is second (US$100,350 salary and US$22,700 bonus), and construction and property is third (US$97,200 and US$8,290).

Financial services is in fifth place with an average salary and bonus of US$107,450 while consulting and professional services firms offer US$104,200. It must be taken into account, however, that many smaller boutique consultancies have entered the fray this year, which will have a consequence on consulting salary levels – though it does mean that opportunities are on the up in the sector.

But the conclusion is clear: once more the financial value of the MBA has been confirmed – if it was ever in doubt. Perhaps the most illuminating statistic is the report is this – the average post-MBA salary of US$91,000 in the US & Canada and Western Europe, for candidates with only three years of work experience on average, is three times that of an undergraduate entering the job market for the first time. Figures which speak for themselves.

For detailed regional analysis, including the highest paying schools in each regions, read the full report by clicking the link below.