2020: 5% Salary Raises Recommended 

Hong Kong people have experienced an unusual summer. In the blink of an eye, it is already late autumn. Besides continuing to protest against tyranny, it is also time to concern the salary increase next year.

Affected by the global economic cycle and the China-U.S. Trade war, the GDP growth has slowed significantly since the fourth quarter of last year. In the middle of this year, the government's attempt to suppress the Anti-extradition Bill movement by an iron fist not only resulted in vigorous resistance from the people but also hit Hong Kong economic profoundly. In the third quarter of this year, the real GDP fell by 2.9% year-on-year. Latest government report shows that the annual economy is expected to contract by 1.3%, which is the first recession since the global financial crisis.

The retail and catering businesses are the first industries that have been affected by the weak consumer sentiments and a sharp drop in the number of visitors to Hong Kong. In September this year, the year-on-year retail sales volume fell by more than 20%, and the revenue of the catering industries in the third quarter also fell by nearly 15% in real terms. The construction industry is another hard-hit sector. Based on a calculation of the fixed prices, the total value of projects completed in the second quarter of this year decreased by more than 10% year-on-year, and public sector construction works fell more than 30%.

With the economic downturn, labour market conditions have also deteriorated. From August to October this year, the unemployment rate rose to 3.1%. The number of vacancies in the private sector in June decreased by nearly 6,000 compared to the same period last year, which is a decline of more than 7%. Looking forward into the fourth quarter, about 20% of institutions in the construction, retail and catering industries are expected to reduce their manpower.

The market is facing a downturn, if companies respond with layoffs and pay reductions, it will only further dampen the market and slow the pace of recovery, and will only achieve an opposite effect. HKCTU believes that a salary increase which is slightly higher than the inflation rate next year is manageable in terms of Hong Kong's economic strength. Furthermore, it will help maintain the people’s confidence and allow the economy to regain its momentum as soon as possible.

Conventional economic theory believes that market wages reflect the level of labour productivity; however, statistics show that local real wages have long fallen behind productivity growth. From 2009 to 2018, the overall economic productivity increased by nearly 26%, but the real wages increased by less than 8% during the same period. The difference between the two categories was more than 18 percentage points. The difference in the retail and transportation industries was close to 60 percentage points. In short, it shows that there is still a lot of room for a raise in real wages.

On the other hand, the rapid economic downturn in the second half of the year was mainly due to the government's use of police brutality which has created a chaotic situation, and the business community who has been acquiescing to the iron-fisted policy of those in power is also the one to blame. If the wage workers were to freeze wages or even reduce wages to pay for the government and the business sector’s deed, it would only aggravate public anger, fuel the current political crisis and worsen the weak economy.

After excluding the effects of the government's one-off relief measures, it is expected that the CPI (A) will rise by about 3.5% this year. HKCTU proposes that the average salary increase next year should be no less than 5%. In addition to maintaining the purchasing power of salaries, it would to some extent recover the difference between wages and productivity over the years. As for individual corporations, the management board should explain the company's business and financial status to the unions and employees, and determine a reasonable salary increase through collective bargaining.