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Tale of two cities: Singapore salaries to jump 2.7% next year, just 0.6% in Hong Kong

Tale of two cities: Singapore salaries to jump 2.7% next year, just 0.6% in Hong Kong


While it’s just been announced that the Hong Kong-Singapore travel bubble has been postponed – at least for the next two weeks – an interesting discrepancy has emerged between the two cities.

According to just released findings from ECA International, “real salaries” in Hong Kong will rise by just 0.6% next year, compared with 2.7% in Singapore.

“Lower rates of salary growth in 2020 in Hong Kong (compared to Singapore) are unsurprising given the impact of socio-political tensions and the COVID-19 pandemic on Hong Kong’s economy,” said Lee Quane, regional director for Asia at ECA International.

“In addition, 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.”

The actual salary increase in Hong Kong – discounting inflation – is tipped to be a healthier 3.0%.

“A total of 40% of organisations in Hong Kong applied salary freezes this year amid the pandemic and the devastating effect it had on the economy. However, in the face of a possible vaccine being rolled out next year, only 25% of companies are expecting these freezes to last into 2021 – offering signs of improvement to businesses and employees based in Hong Kong,” added Quane.

It’s a more robust picture in mainland China.

“China’s economy seems to have weathered the impact of the Covid-19 pandemic better than many other locations in the region and this is reflected in the extent to which salaries are forecast to grow again in 2021,” Quane explained.

“Salary growth rates in China will only be surpassed by 5 other countries in the region, including Bangladesh and Pakistan which generally need to provide high rates of salary growth in order to enable workers’ purchasing power to keep pace with relatively high rates of inflation. Indeed once inflation is factored in, the real incomes of workers in China will grow by 2.3% in 2021.

Salaries for most employees in Macau did not increase in 2020, although they are expected to see some degree of recovery in 2021. Companies froze salaries for their workers in Macau in 2020 at a higher rate than elsewhere in the region. This is not surprising given its reliance on casino revenue and associated hospitality and leisure businesses – which has been severely impacted by the pandemic.

“Singapore has experienced consistently low inflation in recent years, even seeing deflation of -0.4% last year, and next year is no different with an expected inflation level of just 0.3%. This will result in higher real salary increases for workers compared to countries with higher inflation such as Hong Kong,” said Quane.

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