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Asia to face salary freezes in 2002: Survey
Fresh data on expected wage freeze in several countries across Asia, coupled with rising unemployment, spell bad news for policy makers seeking to stimulate consumer spending to spur economic growth next year, analysts said.
Fresh data on expected wage freeze in several countries across Asia, coupled with rising unemployment, spell bad news for policy makers seeking to stimulate consumer spending to spur economic growth next year, analysts said.
Companies around Asia are predicting widespread salary freezes in 2002, according to a just-released wage survey conducted between August and October by management consultants, Hewitt Associates LLC.
The survey was conducted in Australia, China, Hong Kong, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand.
The outlook is particularly gloomy in Hong Kong, where 30 per cent of survey respondents plan to freeze wages next year, the Wall Street Journal reported quoting the survey. Meanwhile, unemployment rates in many Asian countries have continued to rise since the region`s 1997-1998 financial crisis. The percentage of eligible workers that are unemployed in Singapore, for example, climbed to three per cent in September 2001 from 1.9 per cent in March 1998. In Hong Kong, unemployment has increased to 5.5 per cent from 3.3 per cent over the same period.
Economists expect Asian policy makers to continue to cut interest rates and push fiscal-stimulus packages early next year to help encourage domestic spending and offset weakness in key export markets. But as wage growth flags and unemployment mounts, such measures may have limited impact, analysts say.
"These cushions are merely a bridge and not drivers of consumption. Ultimately you do need income growth to sustain consumption growth," UBS Warburg chief economist, Arup Raha said. "That outlook is deteriorating."
The Hewitt annual salary-survey forecast showed that pay increases in 2001 were generally flat. Hong Kong workers saw Asia`s most-meagre pay increases this year, with average rises of 2.9 to 4.1 per cent, depending on the sector affected. That was still slightly better than the 2.7 to 3.8 per cent average pay increases in Hong Kong last year. In Singapore, 2001 salaries increased 4.6 to 5.4 per cent, almost on par with last year. Companies in the strongly unionised Philippines awarded the highest percentage pay rises in 2001, with salary increases ranging from 10.1 to 11.4 per cent.
But companies surveyed by Hewitt expect more pay freezes in many countries in 2002. About 20 per cent of the companies surveyed in Taiwan, for example, expect to freeze wages next year, while about five per cent in South Korea, the Philippines and Australia plan to do the same, the Journal reported.
In Singapore, about 10 per cent of respondents say they will freeze salaries next year.
Singapore`s minister of manpower urged companies to freeze wages or cut salaries to stave off layoffs. A number of large regional companies already have cancelled pay increases. The board of HSBC PLC`s Hong Kong and Shanghai Banking Corp unit voted last week to freeze wages for its 14,000 employees in Hong Kong, a bank spokeswoman was quoted as saying. Bureau Report
The survey was conducted in Australia, China, Hong Kong, Malaysia, the Philippines, Singapore, South Korea, Taiwan and Thailand.
The outlook is particularly gloomy in Hong Kong, where 30 per cent of survey respondents plan to freeze wages next year, the Wall Street Journal reported quoting the survey. Meanwhile, unemployment rates in many Asian countries have continued to rise since the region`s 1997-1998 financial crisis. The percentage of eligible workers that are unemployed in Singapore, for example, climbed to three per cent in September 2001 from 1.9 per cent in March 1998. In Hong Kong, unemployment has increased to 5.5 per cent from 3.3 per cent over the same period.
Economists expect Asian policy makers to continue to cut interest rates and push fiscal-stimulus packages early next year to help encourage domestic spending and offset weakness in key export markets. But as wage growth flags and unemployment mounts, such measures may have limited impact, analysts say.
"These cushions are merely a bridge and not drivers of consumption. Ultimately you do need income growth to sustain consumption growth," UBS Warburg chief economist, Arup Raha said. "That outlook is deteriorating."
The Hewitt annual salary-survey forecast showed that pay increases in 2001 were generally flat. Hong Kong workers saw Asia`s most-meagre pay increases this year, with average rises of 2.9 to 4.1 per cent, depending on the sector affected. That was still slightly better than the 2.7 to 3.8 per cent average pay increases in Hong Kong last year. In Singapore, 2001 salaries increased 4.6 to 5.4 per cent, almost on par with last year. Companies in the strongly unionised Philippines awarded the highest percentage pay rises in 2001, with salary increases ranging from 10.1 to 11.4 per cent.
But companies surveyed by Hewitt expect more pay freezes in many countries in 2002. About 20 per cent of the companies surveyed in Taiwan, for example, expect to freeze wages next year, while about five per cent in South Korea, the Philippines and Australia plan to do the same, the Journal reported.
In Singapore, about 10 per cent of respondents say they will freeze salaries next year.
Singapore`s minister of manpower urged companies to freeze wages or cut salaries to stave off layoffs. A number of large regional companies already have cancelled pay increases. The board of HSBC PLC`s Hong Kong and Shanghai Banking Corp unit voted last week to freeze wages for its 14,000 employees in Hong Kong, a bank spokeswoman was quoted as saying. Bureau Report