China to lead in 2012 pay rise, with HK staying flat
According to ECA's Salary Trends Survey 2011-2012, global pay growth will rise next year despite the economic crises in Europe and the United States. In Asia Pacific, fast-growing economies are taking the lead, with Hong Kong ranking ninth out of 14 for nominal salary growth, and 13th for real salary growth.
The survey - by London-based ECA International, a leading human resources management firm - was based on data from 273 multinationals across the manufacturing, services and non-profit sectors, from 60 countries.
In light of Hong Kong's 1.7 per cent decline in real salaries this year, the city's employees will be somewhat relieved at the survey's findings, which project a pay rise roughly in line with inflation at 4.5 per cent - meaning salaries will stay flat in real terms.
This expected rise in nominal salaries can be interpreted as a clear but cautious sign of confidence in the economy, says Lee Quaine, ECA International's regional director for Asia. Chinese firms, he adds, are boosting salaries to attract the right kind of talent as the country continues in its robust economic growth.
Meanwhile, changes in monetary policy have reined in mainland inflation, putting projected real salary rise there in the top spot at 5.2 per cent.
"[But] the gap between Hong Kong and mainland China is still large [in terms of actual dollar amount]," notes Quaine. "Taxes in Hong Kong are low and so after-tax income here is much more than in China. Because of this, salary growth in China is not a significant worry to employers here."
While the booming manufacturing firms in China may not pose a threat to Hong Kong's white-collar recruiters and employers, other regions are outpacing the city's real salary growth. Singapore, for example, will match Hong Kong's 4.5 per cent projected growth for 2012. But thanks to lower inflation there, employees in the city-state will enjoy a real pay rise of 1.6 per cent.
Still, Quaine remains optimistic about the plight of local companies. "The projected differences between Hong Kong and similar economies [with higher real salary growth] will probably not be enough to prompt employees to leave the city," he says.
But things won't necessarily be good for all, he cautions. Salary growth, he notes, may be lower in sectors closely linked to troubled Western economies. However, local industries and services, such as catering, will experience higher-than-average salary growth, he adds.
Looking ahead, Quaine says that unease about the prospect of a renewed global slowdown will probably continue over the medium term, though lower inflation figures are expected in late 2012.