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October 26th, 2011:

More pay on way, but it’ll be eaten up by inflation

South China Morning Post – 26 Oct. 2011

Clear the Air says : in the Government’s own words= inflation should be therefore included in tobacco tax increase calculations and application.

Most bosses plan rises, and they will average 5pc, but with prices up 8pc employees will be playing catch-up

The good news is that many Hong Kong employees can expect pay rises next year of about 5 per cent.

The bad news is that a 5 per cent increase is not enough to keep up with inflation.

Ninety-two local companies, with a total of 69,260 employees, were polled from July to September by the Hong Kong People Management Association and Baptist University’s Centre for Human Resources Strategy and Development.

Sixty-six firms said they planned increases, on average, of 4.5 per cent for frontline staff and 5.1 per cent for supervisors. For the former group, next year’s 4.5 per cent rise will be less than this year’s 4.9 per cent average.

Employees in higher ranks, including general staff, supervisory or technical staff and managers, will get 5 per cent, 5.1 per cent and 4.9 per cent, respectively – about 0.7 per cent more than this year’s raises.

Yet prices in July were 7.9 per cent higher than in the same month last year. Inflation slowed in August and September, but remains above 5.7 per cent year on year.

Alan Wong Hoi-ming, vice-president of the People Management Association, said inflation was only a minor factor for employers when considering pay rises.

“When companies adjust salary levels, the top factors to be considered are the performance of the company and individual staff. Seniority and inflation are of less importance.”

The European debt crisis is destabilising the global market, making employers more conservative when it comes to pay, the association says.

Lee Cheuk-yan, a lawmaker from the Hong Kong Confederation of Trade Unions, said an 8 per cent pay rise was necessary for workers to keep pace with inflation.

“Hong Kong bosses are ignoring the quality of life of their employees … I hope they are not using the debt crisis as an excuse for not raising salaries high enough,” he said. Lee also said the government should push for an increase in the HK$28-an-hour minimum wage next year.

Dr Felix Yip Wai-kwong, senior lecturer in Baptist University’s department of management, said rising operating costs, especially rents, were a drag on companies.

In some sectors, salary rises will exceed the average range. Thanks to the booming number of mainland shoppers, middle- to high-ranking staff in the retail industry are projected to see the highest salary increase, 6.5 per cent, next year. Frontline staff in non-governmental organisations can expect 5.8 per cent.

After the implementation of the minimum wage in May, security guards secured the biggest increase in earnings this year – 11.5 per cent on average.

However, they are likely to get the lowest rise next year – 3.4 per cent.

The association’s president, Pauline Chung Hei-ching, said frontline staff would get a smaller rise next year, as many of them saw a big increase due to the minimum wage.

Twenty-eight of the companies surveyed had to raise salaries over the past year to comply with the minimum wage law, but none had fired staff to cut costs, the association said.