- Salaries in Hong Kong substantially higher than most in the region, do not increase as dramatically as in many economies above it in survey, says ECA International
- Workers in mainland China to see salaries increase at fastest rate in region, with pay of workers in Shenzhen to increase most rapidly
At 1.9 percent, Hongkongers can expect one of the lowest real salary increases in Asia next year, along with a reduction in pay offered on recruitment and in various allowances, according to industry experts.
Employees in the special administrative region will lose out to those in mainland China, Malaysia and Singapore, among others, according to a report on annual salary trends published on Thursday by consulting firm ECA International.
Although they will on average receive a nominal pay rise of 4 percent, Hongkongers’ real salary increase will amount to 1.9 percent after deducting for inflation. This is higher than the 1.8 percent increase in 2018.
“In nominal terms, Hong Kong’s salary increases are not ‘poor’. The 4 percent rate of increase is higher than Macau, Singapore, Taiwan, Australia, New Zealand and Japan,” said Lee Quane, regional director for Asia at ECA.
“Salaries in Hong Kong are already substantially higher than most in the region and, therefore, do not increase as dramatically as in many of the emerging Asian economies that are above them in the survey,” said Quane.
Last year too, ECA’s annual report on salary trends forecast a nominal pay rise of 4 percent in 2018 in Hong Kong. The real salary increase was pegged at 1.8 percent. In April this year, the Hong Kong government did increase civil servant pay by 4.06 percent, tracking market pay rise levels. With inflation at between 2.1 percent and 2.4 percent in the second quarter, the real salary increase came to about 1.6-1.9 percent, in line with the ECA forecast.
The 1.9 percent real increase forecast for 2019 sits below the Asia-Pacific average of 2.7 percent and ranks Hong Kong 15th out of 20 Asian countries, and 24th out of 69 countries worldwide. The city loses out to almost all Southeast Asian countries. The increase in real salaries in Singapore is higher, at 2.6 percent, and ranks the Lion City at 11th in Asia.
India was top in Asia and worldwide, with an expected real salary increase of 5.1 percent in 2019. It was followed by Vietnam and Indonesia, with mainland China and Thailand coming in joint fourth in both Asia and worldwide rankings.
Elsewhere, Robert Knight, partner at executive search company DHR International, said on Wednesday Hong Kong salaries will remain stable, with more of a downward trend in the future.
“Hong Kong is likely to see a reduction in salaries offered on recruitment along with a cutting down of travel and entertainment expenses, as well as year-end bonuses, next year,” said Knight.
“The stock market downturn and the ongoing US-China trade war add more uncertainty to the economic outlook, which when added to a surge in available local talent, means companies are able to cut their cost and show a reluctance to pay high salaries when hiring new staff,” he said.
“It’s a simple case of supply and demand when it comes to talent availability, and a simple case of short-term market uncertainty.”
Hong Kong’s benchmark Hang Seng Index has declined by 13 percent this year, while the mainland China benchmark, the Shanghai Composite Index, has lost 20 percent of its value because of worries about an economic slowdown amid the trade war.
But as far as the mainland goes, Knight said there was still a strong demand for new hires, particularly in the asset-management industry, where 50 international fund houses have expansion plans.
“Mainland China is in the process of opening up its financial services sector with a lot of positive comments coming from the regulator in recent months. This has led to greater hiring demand,” he said.
Therefore, it comes as no surprise that employees in mainland China are expected to report a real salary increase of 3.8 percent in 2019, according to the ECA survey.
“Workers in mainland China are set to continue to see their salaries increase at the fastest rate in the Greater China region, both in nominal terms and real terms, with the pay of workers based in Shenzhen likely to increase at the fastest rate,” said ECA’s Quane.
Quane added that there was very little variation in the rate of increases among sectors in Hong Kong. “The financial services sector saw the lowest rate of nominal salary increase with increase rates of 3.7 percent, while all other industries reported an average rate of increase of 4 percent,” he said.