Students look for part-time jobs during their summer vacation at the Teenager Job Expo 2014 at Sheung Wan Civic Centre. Employees in the city's food-and-beverage industries are said to lack the bargaining power for higher wages as their jobs require low skills. Parker Zheng / China Daily

High rents, labor import blamed for holding down wages

Hong Kong's labor market has remained tight as reflected in the latest government data which showed that third quarter (July to September) unemployment rate has stayed at 3.3 percent, unchanged from the previous quarter.

But the prolonged labor shortage situation has failed to lift wage levels, economists noted. Government figures showed that the unemployment rate has remained below 3.5 percent for three years. Meanwhile, real wages have hardly increased during that time.

For instance, the nominal wage index rose 4.5 percent in June 2014 from a year earlier. But the real increase after inflation was only 0.5 percent.

The real wage index compiled by the Census and Statistics Department has hardly increased from 2012 to this year's second quarter.

Lily Lo, an economist at DBS, told China Daily that factors that have been holding down wages under a full employment situation are very complicated.

"I believe there are a number of major reasons for that," Lo said. She cited high rents, especially for commercial premises, as a major factor because they directly cut into employers' profit margins, making it necessary for them to reduce costs, including employees' wages.

She added that the labor unions in the city are not as powerful as they are in many other developed economies. This, she said, has greatly undermined workers' bargaining power.

Ng Chau-pei, chairman of the Hong Kong Federation of Trade Unions, told China Daily that real wages, especially for the majority of low-income people, have not moved up for many years .

"If you take a look at the official data, big pay rises were limited to only workers in the high-end industries such as financial services. They are certainly in the minority," Ng said. Most other workers, he said, didn't get any meaningful wage rise for a long time.

Ng also noted that wages are kept low by the importing of labor from neighboring countries. This means that local workers were denied a chance to take full benefit of the economic expansion in recent years, he said.

What's more, many employers in the food and beverage industries, as well as retail, mainly hire temporary workers who are not in a position to demand high pay, Ng said.

Many workers are employed in the services sector in jobs that require little skill. Most of the time, "they just have to accept what are offered by their employers", Ng said.

Contact the writers at sophiehe@chinadailyhk.com and sylvia@chinadailyhk.com

(HK Edition 10/21/2014 page8)