Workers in Hong Kong set to see higher real salary increases in 2020

By ECA International | Wednesday, 11 Dec 2019

The average real salary increase for workers in Hong Kong is forecast to be 1.4% above inflation in 2020, a slight increase on the 1.0% rise that workers saw in 2019.

Despite a nominal salary increase of 4.0%, after factoring in the forecast inflation of 2.6%, workers in Hong Kong will only see an average increase of 1.4% in real terms — one of the lowest increases in the Asia-Pacific region.

“Despite nominal salary increases staying at 4% next year, the predicted drop in inflation from 3.0% to 2.6% means that employees in Hong Kong will see a slightly better overall salary increase in real terms this year” said Lee Quane, Regional Director — Asia at ECA International. “Although this is still lower than the overall APAC average, the fact that the nominal increase will remain at 4% in 2020, as it was last year, is surprising given the backdrop of the current economic situation in Hong Kong. However, this underlines the fact that many companies in Hong Kong need to continue to attract and retain staff even in this period of economic adversity for the city.”

Asian nations dominate the top 20 once again

Asian nations lead the way again for real salary increases, with 13 out of the top 20 increases being seen in Asian nations, and all of the top five.

Quane said “Once again, the vast majority of the highest real salary increases in the world are predicted to be seen in Asia. The average real salary increase in the APAC region is forecast to be 3.2%, significantly higher than the global average of 1.4% and nearly three times the European average of 1.1%. This is a trend that we have seen for many years now due to low inflation and rising productivity in many Asian economies, resulting in salaries growing rapidly compared to other regions.”

The emerging economies of Vietnam and Thailand both saw significant real salary increases, placing them in the global top five, with increases of 5.1% and 4.1% respectively.

“Workers in Vietnam and Thailand will both see further increases to their salaries as the nominal salaries expected to be given by employers stay well ahead of the low levels of inflation that these countries will see in 2020. This has been a long-term trend for both countries, as productivity continues to grow, and inflation is controlled” said Quane.

Similarly, the real salary increase in China is again expected to be above the regional and global average at 3.6%.

Quane said “Although there are signs that the Chinese economy may be slowing the face of the ongoing trade war with the US, wages and salary increases are still holding firm and China maintains its place in the global top ten for salary increases. It will be interesting to see whether this holds up into 2021 and beyond though if Chinese growth continues to slow.”

However, not all workers in emerging Asian economies will benefit from above average salary rises after inflation. Workers in Malaysia are expected to see a big drop in their real salary increases compared to previous years, down to 2.9% from 4.0% in 2019.

“Despite the forecast nominal salary increase staying at 5.0%, inflation in Malaysia is expected to rise from 1.0% to 2.1% which will reduce the rate at which salaries increase in real terms for workers in the country. Although still relatively high, the predicted lower real salary rise for workers compared to 2019 has seen Malaysia drop out of the global and APAC top ten” explained Quane.

Singapore will also see a lower real increase than last year, consequently the forecast 3.0% increase is slightly below the APAC average.

Quane said “Although the forecast real salary increase is set to be slightly lower in 2020 than the 3.3% employees in Singapore saw in 2019, workers will still see a larger increase than regional neighbours Hong Kong, Taiwan and Japan. The notably low level of inflation that Singapore has seen over recent years, coupled with a tight labour supply and talent restrictions due to immigration constraints, means that salary increases will remain relatively high.”

Workers in India and Pakistan see contrasting fortunes

India once again tops the table for average real salary increases in Asia, but now also tops the table globally in 2020 too. The average real salary increase is set to be 5.4% for workers in India.

“Salaries in India are set to rise significantly, with the 5.4% increase almost four times as high as the expected increase in Hong Kong. Despite inflation rising slightly from 2019 and the economy slowing slightly, workers based in India can expect to see another bumper increase to their salaries. However, unless growth picks up again salary rises of this scale may not be sustainable in the longer term” said Quane.

It will be a very different story for their neighbours Pakistan in 2020 though, who are the only APAC nation predicted to see a decrease in their real salary.

Quane explained “The average real salary increase in Pakistan is forecast to be -3.0%, meaning that employees will be worse off than they were last year. Despite the nominal increase staying at a relatively high 10.0%, inflation has shot up as the rupee has depreciated. Inflation in Pakistan is forecast to reach 13.0% in 2020, exceeding the nominal increase and leaving workers out of pocket compared to 2019”.

Argentina remains bottom of the table

Argentina remains firmly at the bottom of the table, with real salaries forecast to decrease by 22.0%, as the economic situation in the country goes from bad to worse.

Quane said “The nominal salary increase for Argentina has stayed at a whopping 29%, the same as last year, but with inflation significantly higher at an alarming 51%, this means there will be another significant decrease in real salaries for workers in Argentina. Although President Macri and his government have now been replaced by their populist rivals in a recent election, the outlook for Argentina does not look promising and it is likely that the economic situation will get worse before it gets better.”

Middle Eastern nations tumble in the rankings

Saudi Arabia saw the biggest real increase in salaries in 2019 but is expected to plummet in the rankings in 2020. Real salary increases are forecast to reach 2.4% on average, a long way short of the 5.8% increase that was seen in 2019.

“Inflation has risen significantly throughout the Middle East as the stable commodity prices boost domestic demand. This has seen Saudi Arabia, UAE and Qatar all drop out of the global top ten as rising inflation cuts into the real salaries of workers in the region” explained Quane.


Top ten forecasted real salary increases in 2020 – Global



2020 global ranking

Forecast real salary increase for 2020

2019 real salary increase

































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ECA International

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