Workers in Hong Kong experienced a reduction in salary growth in 2020 as an unfavourable economic situation adversely impacted businesses due to both the city’s socio-political tensions and the impact of the COVID-19 pandemic. The average rate of salary growth for workers in Hong Kong was 2.1% in 2020 pulled down by two in five employees getting no rise at all, almost half the 4% rate of increase provided in 2019. However, businesses are hopeful of an economic recovery in 2021 and expect salaries to increase by 3.0% on average in 2021 though one in four employees will get no salary increase. These figures and research findings were provided by The Annual Salary Trends Report by ECA International.
Lee Quane, Regional Director, ECA International, Asia said, “Lower rates of salary growth in 2020 in Hong Kong are unsurprising given the impact of socio-political tensions and the COVID-19 pandemic on Hong Kong’s economy…The expected rebound to 3% in 2021 shows that employers are cautiously optimistic about the prospects for recovery next year. However, the fact that these rates remain lower than 2019 reveals that any recovery is likely to be gradual.”
Additionally, real salary increases, which reflect increases in employee incomes after inflation is taken into consideration, will be relatively low in Hong Kong in 2021, at 0.6% after taking forecast inflation of 2.4% for 2021 into consideration. Quane added, “Real salaries for Hong Kong residents, forecast to be 0.6% next year, will be amongst the lowest in the region. This compares unfavourably with expected rates of real increase in Singapore of 2.7% and may hinder the extent to which the Hong Kong economy may recover from the current recession.”
There is expected to be a major drop in the number of Hong Kong-based companies implementing salary freezes in 2021. Close to half of the Hong Kong organisations applied salary freezes in 2020 amid the pandemic and the devastating effect it had on the economy. However, in the face of a possible vaccine being rolled out, only one-quarter of companies expect these freezes to last in 2021—giving hope of better times to businesses and employees based in Hong Kong.
Paul Arkwright
Publisher
