Deflationary pressure on the local economy not significant: Prof

HONG KONG: Although economically things are gradually looking up, annual wage trends did not move in the same direction between September 2008 and September 2009. The average wage rate fell by 1.8 percent this September over one year earlier, according to the Census and Statistics Department (C&SD).

This represents a 2.6 percent decline in real terms after discounting the changes in consumer prices, the C&SD said.

Despite the decrease, there is still a bright side, because more companies raised their wages relative to June 2009.

Forty-one percent of companies recorded increases in average wage rates, eight percentage points higher than the corresponding figure in June. About 52 percent of companies reported drops in average wage rates, down from 61 percent in June. The remaining 7 percent of companies reported virtually no change in average wage rates.

As for the whole third quarter of 2009, the average wage rate actually increased by 2.1 percent, and 3.0 percent after discounting the changes in consumer prices.

Fred Kwan Yum-keung, associate professor of the Department of Economics and Finance at City University of Hong Kong, confirmed the overall wage level in Hong Kong is "stable".

"It reflects that deflationary pressure on the local economy is not significant," Kwan said.

He believes the wages will increase gradually along with the economic recovery. "In the first and second quarter of 2010, companies will increase the wages in order to retain their employees," he said.

Andy Chan Wing-chiu's attitude is more circumspect. Chan is associate professor at Polytechnic University expertise in Pay and Benefits.

"I will still wait and see until around the Lunar New Year of 2010, because companies may adjust their employment strategies at that time," Chan said.

"The wage level in November and December 2009 may just be equal or a little increased compared with one year ago," he said.

As for people who are planning to make radical career changes, Chan suggested they wait until the labor market is more clearly optimistic. "The positions in the current market may not be stable enough for long-term personal development," he said.

(HK Edition 12/29/2009 page1)