Pay increase fails to beat inflation

Top News | 19 Oct 2021

Maisy Mok

For the first time in 10 years, the average pay increase for employees in Hong Kong has failed to meet inflation.

And the expectation for next year is for a 3 percent raise, the survey by the Hong Kong Institute of Human Resource Management indicates.

But a survey by the Federation of Hong Kong and Kowloon Labour Unions shows workers believe a reasonable pay rise for 2022 would be up to 6 percent.

The Institute of Human Resource Management's pay trend survey released yesterday found that employees received an average pay increase of 1 percent this year - "a noticeable drop" from last year's 1.4 percent.

With the average inflation rate of 1.4 percent from January to August this year, workers saw their real base pay adjustment hit a negative 0.4 percent - the first time it dipped below zero percent in 10 years.

The institute surveyed 115 companies and 162,800 full-time salaried employees from January to September but based the pay adjustment on data provided by 105 firms.

"The average salary increment, at only [1 percent], mirrors organizations' cautious attitude toward pay adjustment as the Delta variant brings economic uncertainty," said institute vice president Lawrence Hung Yu-yun.

"As the pandemic is not going away Hong Kong's economic conditions are a key reason why organizations are guarding their purse strings when it comes to increments."

The survey projected that a pay adjustment next year at 3 percent. The forecast adjustment for this year was for 1.7 percent from 2020 rather the 1 percent seen.

"This reflects that the local economy is reawakening as Covid-19 is increasingly under control," Hung said.

Thirty-seven percent of companies said they will increase pay next year while 6 percent intend to implement a freeze.

More than half of the 105 companies have not produced pay adjustment projections for next year.

The survey also showed 69 percent of companies had this year offered a pay rise, 31 percent implemented a freeze, and 1 percent cut pay. For two years in a row, the top factor behind pay adjustment has been company performance.

For this year, medium-sized companies with between 500 and 1,000 employees provided the biggest pay rise at 2.8 percent, small companies with less than 500 staff offered a rise of 1.4 percent while for large-sized companies with more than 1,000 staff it was a mere 0.7 percent.

Looking to 2022, a citizen named Chan said: "A pay raise is unlikely." The pandemic was continuing, he noted "and the economy has yet to recover."

A female employee thought the chance for her to be given a rise is minimal as the economy is "not too good."

The survey by the Federation of Hong Kong & Kowloon Labour Unions showed 34 percent of 2,512 workers questioned thought a reasonable pay hike for 2022 would be 4-6 percent.

And the federation itself said an increase for 2022 should not be less than 6 percent. The poll, conducted from June to September, also found 70 percent of respondents experienced a pay freeze in the past year. Fifteen percent had cuts.

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