Salaries in Hong Kong

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I’m home with the flu today. I’m feeling shitty so if you want to blame this post on that, feel free.

The Hong Kong Economic Times reports that the current starting salary for a university graduate in the IT field is HK$12,000 per month.  That’s roughly US$1,560 per month or US$18,720 per year.

Restaurant workers in Hong Kong can get HK$10,000 a month and maybe even some tips on top of that.

Of course, an IT worker with a few years experience will see his or her salary go up a fair amount – if they’re smart and if they’re working for the right company. In most cases, if they’re working for a local company and don’t make it into the ranks of management, they will top out at around the HK$20-25k per month mark.  (I’ve known people with PhDs earning this amount.)  The best ones will go to work for an ibank, where they can earn double that, or try to start their own company.

These are programmers and sysadmins we’re talking about, the same skills that can earn a six figure annual income in the US. Here they make so little that they have to live with their parents until they get married so there’s a second income to help pay the rent.

I know this is a fact because I see the salaries of the people who work for me (and it’s something that I’m essentially powerless to do anything about since I don’t set these numbers in the company I work for or the ones I worked for in the past).

Side story: Not my current workplace, but my previous one. I was online at Subway to get lunch and saw one of my programmers standing in line in about 5 people in front of me. A guy who was earning just about HK$11,000 per month.  They told him HK$30 for the sandwich. He asked to use Octopus, and was told they don’t accept that. He didn’t have HK$30 (US$3.90 in his pocket! He turned to walk out of there without any food. I tapped him on the shoulder and handed him the money to pay for his lunch. You know what he asked me? “Do you have enough cash left for yourself?” I think this is the daily reality for a lot of people in HK.

This vaguely leads me into a rant that I’ve had sitting in my drafts folder for several months.

Every time people complain about the rising residential and commercial rents, we are told that nothing can be done because Hong Kong is the world’s freest market economy.

Every time people complain about the massive influx of mainland tourists shoppers overwhelming almost every aspect of daily Hong Kong life, we are told it is good for the economy.

We are lied to on a daily basis. 

Today, over 1.6 million people, more than 300,000 of them elderly, live in poverty in Hong Kong. How is this even remotely acceptable in “Asia’s World City”?  Why do we accept the fact that we live in a place where the elderly go from trash bin to trash bin looking for recyclable materials (cardboard, beer cans, etc.) so that they can get a few dollars for a bowl of instant noodles for dinner when our government has billions of dollars of excess tax income just sitting there?

Rapidly rising unregulated commercial rents serve to benefit only a small handful of billionaire landlords. We read almost daily reports about how family businesses that have thrived for generations are forced to shut down.

The high price of rent is reflected in the high prices we pay for food, goods and services – it is in effect a hidden tax burden that must be carried by all Hong Kong residents. The artificial housing shortage created to benefit the Hong Kong billionaires only makes matters worse. 

We’ve had ten years of increasing numbers of mainland tourists streaming across the border and there has been almost no benefit at all for the average Hong Kong citizen.  The only benefit has been the creation of more jobs at the very lowest rungs of the ladder, the minimum wage rung and the barely above minimum wage rung. 

Salaries at the bottom rungs of the ladder have remained flat in Hong Kong for a decade or more. The minimum wage in Hong Kong is HK$30 per hour.  So someone who works an 8 hour day and a six day workweek can earn HK$6,240 per month, barely above US$800 per month or HK$74,880 per year.

The Confederation of Trade Unions ran a study with security guards, earning from $30 to $35 per hour. “Thirty-nine percent claimed it was a constant struggle to buy enough food to get by, while 37 percent said it was virtually impossible to find rent money. The vice chairman of the confederation, Tommy Yu Chung-yiu, noted that inflation increased 4.5 percent last year and so security guards felt the pinch worse than most, given their pay.”

In the U.S., they are discussing raising the minimum wage from $7.25 to $10.10. From The Atlantic, “Increasing the minimum to $10.10 an hour, as Democrats have proposed, would eliminate about 500,000 jobs. On the other hand, they also find it would pull 900,000 people out of poverty, and put around $19 billion into the pockets of low- and middle-income families. About 16.5 million workers would get a pay bump.  Wealthier families see their real income drop a bit, as business profits slip and prices rise somewhat.”

I’m not an economist (and I don’t play one on TV either) but I think one might safely assume that a larger bump in the HK minimum wage (the last increase, in 2013, was US$0.26 per hour) would have a similar impact here. The billionaires might have to get one less bowl of sharks fin soup at Fook Lam Moon per year (boo hoo!) while a significant portion of the Hong Kong population might be able to stop eating cat food for dinner.

No, I don’t know the answer. Except I know that Hong Kong’s current answer, which is essentially doing nothing, definitely isn’t the answer.

More on this later I’m sure.

 

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24 thoughts on “Salaries in Hong Kong

  1. mumphLT

    The argument that raising the minimum wage misses the point that people with more money – spend more money. The wealthy save money – off shore it, ‘invest’ it…buy luxuries. The working classes, the (ever lower) middle classes spend the more in the community and on consumables – they create local jobs….

  2. Pete

    Money put into the hands of working and low income people ends up back in the local economy. Money put into the hands of the rich ends up in the Cayman Islands.

  3. Karen M

    We must applaud the low income people of Hong Kong, they choose hard work instead of committing crimes, they prove that poverty doesn’t necessarily generate high crimes rates.

  4. Oliver

    It’s a sad fact you have mentioned. Even if locals manage to work for large international companies it doesn’t necessarily guarantee a good salary for them. Let alone can they sometimes get a foot in the door. There are just too many obstacles.

    You haven’t even touched the education system. That itself is depressing – something of which I have had some exposure to. Forget the news about the influx of mainlanders taking up spaces in nurseries and kindergartens, look at the current system of bandings and the education system itself. Going back to the job front, there are teachers that don’t want to teach – they simply went into teaching in order to get a salary & have been doing it since. This is then reflected on their students.

  5. Judy

    Thx for writing for us – I work in the IT field, the local developer all know about it but “the truth” never really got out to the non-chinese speakers – until you write this. Appreciate it.

  6. GF

    Just commenting on your “side story”:

    Side story: Not my current workplace, but my previous one. I was online at Subway to get lunch and saw one of my programmers standing in line in about 5 people in front of me. A guy who was earning just about HK$11,000 per month. They told him HK$30 for the sandwich. He asked to use Octopus, and was told they don’t accept that. He didn’t have HK$30 (US$3.90 in his pocket!

    This is almost certainly because he left the office thinking he only needed an Octopus card. I’ve done this many times. (Some Subways in Hong Kong accept Octopus and some don’t, as far as I recall). It’s almost certainly not because he’s about to starve to death.

    He turned to walk out of there without any food.

    Maybe he was going to get some cash, or order from McDonald’s instead?

    I tapped him on the shoulder and handed him the money to pay for his lunch. You know what he asked me? “Do you have enough cash left for yourself?”

    This is called politeness, because he doesn’t expect you to be carrying a lot of cash either.

    I think this is the daily reality for a lot of people in HK.

    It is, so maybe you’re missing something.

    There are problems with the property market in Hong Kong, but almost all of them stem from government interference in it. Have you not wondered why the old airport isn’t redeveloped yet after almost 20 years? And why there’s a huge, ugly, expensive cruise terminal there instead of homes? That’s the true scandal.

    I know plenty of programmers in Hong Kong too, and many of them earn very well, especially compared to other jobs here. Programmers in the Mainland earn even less. The differential in wages is due to the differences in productivity and comparative advantage. There are no programmers in the USA doing the same task as the vast majority of programmers in, say, India. If anyone in Hong Kong thinks they are underpaid, they are welcome to change jobs or even work for themselves! It is still a relatively free market…

    1. Spike Post author

      You’ve managed to simultaneously quote back pieces of my post and put words in my mouth. That couldn’t have been easy!

    2. Bob

      I’m fed up of this conceited ‘if you don’t like it, just change jobs’ shtick that I hear continuously from free-marketeers that myopically believe everyone has the same opportunities that they feel they have themselves.

      The point is that the whole industry/SAR is paying low wages so what job can they change to?

    3. Chi

      I agree with Bob and Spike here, HK’s problem goes so much deeper. It’s not a case of “I use octopus and dont have cash” a lot of well trained professionals are struggling to get by because the rich corporations are planning games that only benefits them.

      Good post spike, thanks for calling this out

  7. sophia

    I was a finance VP in a major US HQ IT company. I quit my job because I simply couldn’t tolerate what I had to do. As a partner to my GM, I had to play the “bad corp”. Cutting cost was the only “strategy” in town. Every quarter there is a target and I demanded names of IT workers to be fired and dollars to be saved. I had to push country leaders to fire the experienced and seasoned project managers and replace them with “fresh grads” as they cost next to nothing, or outsource practically everything to India. Labor Mix has to be predominantly junior people. Yet VPs were all traveling business class at least twice a month for one meeting or another. I made good money as a hatchet man. Business has never been a democracy but some animals are definitively more equal than others.
    The company is making money but is not satisfied as it promises Wall Street earnings GROWTH. As the C suite is paid in stock, they do whatever it takes to pump up stock price.
    In HK, many bright kids study IT and work in the field. My warning to them is stay away unless you can be hired by the Googles of the world, otherwise you will be slaving away at bare minimum wages.

    1. justice

      thanks for sharing your experiences. This is the single greatest drawback to a company going public. Rather than being satisfied with stable or minimal growth of 1% (which isn’t bad, is it?), Fortune companies now much earn 10% or more. If they don’t, the valuation of the company will go down, influencing stock prices. Look at Apple: They had a great quarter last year, producing amazing products yet their stock went down because they didn’t achieve AMAZING results. Never mind the fact that they were still kicking ass.

      I’ve determined that my best course of action for the rest of my career is to avoid working for a company that is listed on Wall Street.

  8. Dan

    Locals in Singapore have the same experience/issue as those in HK it seems. One sees old people aged 65+ (who should be putting their feet up) working in the local hawker centres breaking their backs for a few dollars because they can’t get by in the world’s most expensive country (city!). Younger Singaporean’s complain they don’t get paid as much as foreigners (and they need more money to buy Luxury goods and the worlds most expensive cars), whilst those less skilled don’t want to take the simple jobs like cleaning or working in F&B and leave that to Filipino’s or Mainland Chinese. The construction boom is thanks to the hard work of mainly Mainland Chinese and Bangladeshi’s.

  9. Victoria

    To be fair, I agree with one of the commentators on that saying “do you have enough cash left for yourself?” does not at all suggest that the person has no money to buy his meal! It’s most common in Hong Kong to just bring your Octopus with you when going to lunch (I’ve done that quite a few times myself)…Therefore the guy’s words cannot be interpreted as having no means for basic survival ;))

  10. Jackie

    After reading your post, I just have a few thoughts about it, most of them are not so possitive ( not your post)

    It’s a “so sad, but true” reality that we are facing in Hong Kong, but it is the same mind set that hinder us from actually doing something, I have never seen any people after saying that sentence go home and think about what they can do. But quite sadly, moving on with their lives, I understand that HK does not have that high level of democracy, and people are actually protesting for it. Instead, I rather suggest them to to fight for something that can relate back to their daily lives ( like minimum wage).

    But the problem here is that, even though HK is a knowledge based society, admittedly, we do not even know well enough of our political system. And to be honest, most people do not vote, and when there are discussion forum happens, not so much people tune in. The point is that most of Hong Kong people lack of political participation and professional knowledge to actually discuss what’s going on, because they simply do not have enough time after the whole day at work, and a wife, a kid, a mother, or a family to feed.

    That kinda lead people do not know what to expect in their short future, and eventually their financial planning.

    Needless to say HK property market and government intervention is just a whole bunch of bloody time ticking boom waiting to explode. And I really love your point of artificial housing shortage, I mean the government has too much power right now, or the tycoons, and power just lead to corruption ( politicaly). And the only way to stop it is that, let the market actually collapse and see what will they have to do, I mean what else can you do? protest? they probably sitting at their desks and laugh at you to be honest.

  11. nulle

    I find professionals in engineering and IT are not really respected for their work, especially when you see the way fresh engineering/IT graduates were treated and in terms of obscenely low salary.

    I find it is sad that when times are tough, employers in general look to cut costs via salary reductions or layoffs and when times improve, generally don’t/rarely gave rises or hire more. Employers in HK generally use the axe to scare their employees into more productivity. The situation in mainland is like HK and Singapore but magnified exponentally.

    On the other side, I begin to find the real estate families/cartels are more scum everyday. Especially when they advocate more for China than for HK itself. I concur high rents/real estate prices equivalent to hidden tax and the lack of competition in HK sucks. I see the mix of industries and different sizes of business change for the last 20 years into what essentially is a finance, retail, real estate, and tourism industries dominated by large/megacap corporations.. Small/medium business is being squeezed out. Example is the number of small shops in New Terrorities and Sheung Wan converted to drug/luxury stores to cater to the mainland chinese.

    HK gov’t is a joke and a bunch of wusses failing to do their fudicially duties to HK people. I would love to see HK people rise up, but unlikely due to worry over their jobs. I love to see an entry tax of mainland chinese and place a stop of luxury apartments and focus on building more apartments on HOS and public estates.

    I suggest those who have or study engineering degrees to go elsewhere (away from Asia) if they want to make a living in their enginering fields.

  12. socent

    HK has one of the lowest unemployment rates in the world. So much so that they have to import workers from other countries to do things like construction and dish washing.

    I started a company as a way to create jobs for disadvantaged and unskilled people. Yet I still had lots of trouble finding people to employ. And the number one reason is because the people would rather not work because it’s too hard or they have other choices available. That’s one of the big issues with labour in China too. Factory workers have so many choices that factories are having trouble keeping workers.

    In regards to the cash issue, it’s typical for people to not carry cash around because credit card and contactless payment forms are accepted everywhere. He was going to pay with his octopus which is the same as cash.

    One of the flaws of the govt recently was the $6000 handout that was given to every PR whether they actively live in HK or not and regardless of income/wealth. But you know what a lot of low income people did with that money? Spent it on vacation, clothes, etc. When they could have saved it and bought something more meaningful.

    But do the rich get richer? Yes because they have more resources. That is true. However an earlier comment about taxes is valid. HK has one of the lowest tax rates in the world. There is less incentive to place money in a tax shelter vs the US or UK. So as such HK dies quite well on tax revenue, which is used to create public programs, etc. Also at $12000/month that’s the equivalent of US$22,500 pretax salary/year. Entry level salary for many industries (I.e. marketing, PR)

    In addition, the other reason why salaries are low is because there are less meaningful jobs here. That’s why the govt is investing a lot of time and money in promoting foreign investment and startups. Its because they have realized that there aren’t enough meaningful jobs here. The talent is all going abroad and the people that stay don’t have an opportunity to develop their talent from the lack of meaningful work.

    In regards to rent, living with parents till marriage is normal and is cultural. Many wealthy children still live with parents until marriage.

    And if they want to live alone, that’s fine. They can get a roommate and split the rent. You can get a small 2bedroom for $11000. It’ll be small and out of the way, but it’s doable. And if its an entry level job, then they shouldn’t live alone. I think many people live at home the first few years to save up and then rent or buy around the world.

    Lastly, people who don’t make as much money need to practice savings. There are so many low income people that are toting around new clothes, electronics, etc. Things that are actually luxuries. If you live with parents at $12000/month with no rent and daily spend of $170 (which is a lot in hk and can buy 5-8 meals) you can effectively save $5000/month. Per year that’s $60000 saved. Save for 3-5 years, thats $180k-$300k, which is more than enough for a down payment on a small first home. It wont be nice and luxe, but it is a first home. And this assumes you don’t get a raise and you don’t invest.

    My point is that people forget how hard and poor hk was in the 50s-70s. And people during that time worked really hard to get where they are…and this includes tycoons. Typically people are at low paying jobs and stay there have no desire to move up and make more.

    And if you really feel bad about it, give your employees a fat red envelope bonus during cny. It’s out of company policy.

  13. Eugene

    Better to do rent control than increase minimum wage. Increasing minimum wage is just asking the middle class to subsidize the lowest income. And food price increments will quickly cancel out all benefits. On the other hand, if you want to “take out the billionaires’ shark fin soup at Fook Lum Moon”, you need to reign in their effortless profits – that’s to stop them from ever increasing rent and drive up prices for everything. What they are doing is making everyone on the street – lower class and middle class included – pay for their shark fin soup.

  14. Tommy

    Dude, you rocked this post. This is so godamn true! We got tycoons here eating shark fin soup playing golf while elders and people who makes a difference in Hong Kong suffers. I seen shops closed down because ‘rent was too high and they cant sell enough’ to make rent.

    My hats off to you.

  15. nulle

    socent,
    I personally think the property market is a joke…consider a P.O.S. of an apartment/flat at Yuen Long and Kwun Tong now is about 2 Million, you need at 20% about 400k for down payment and probably another 5% to close (100k) that’s not including the Buyer Stamp duty and the Spec Stamp Duties. For entry level people, you have to save very carefully to achieve this. Not to mention the mortgage payments. I also forgot most employees have to take money home to support their parents that would further cut down your 5k/month figure.

    re: personal finance, post 80s and 90s generations in HK beginning to learn personal finance just like their peers elsewhere (Gen Y and Millenuials) But HK real estate prices is the least affordable in the world.

    Fresh HK engineering graduates earning 12k HKD a month would equivalent to about 18.5k USD pre-tax. Given HK is a low tax regime while US does tax. 12k HKD a month would equate about 16k USD/yr (about 1250 USD a month) remember living in US requries buying auto and health insurance that would eat into another 25% of the wages. It is hard to move up the ladder at these earnings.

    I personally disagree with the cash issue, using payment like octopus makes things convenient. If using electronic payments are the normal. then why not install Octopus terminals everywhere, including wet markets, restaurants in public estates and all the luxury shops? Cash and Credit/Debit cards is still king versus the likes of Octopus.

    speaking of shark fins, hope Li Ka Shing or the likes of him chokes on his next lunch at Fook Lum Moon.

  16. RS

    Another side-story:

    If anything/anyone is to be blamed, blame the bastards in US who started the ZIRP (Zero interest rate policy)!

    The ultimate root of all poverty problems around the world is due to the Greed of US bastards who prints unimaginary amount of debt to pay for their high-salary workers…

    It is THIS ZIRP which drives all the people who rely on pension to become so helpless that their savings can’t save them at all.

    Stop blaming the Chinese side if you don’t have a global picture. If you don’t like them, a lot of other countries open their arms for them.

  17. Rob

    This thread has started to remind me of a Monty Python sketch. What have the Romans done for us? So every modern society has it’s faults. Democracy itself is flawed, yet we aspire to it. So in this case let’s see what HK has done for us, rather than what it hasn’t.

    1. Low taxation. 2. Cheap healthcare 3. Rule of law 4. Freedom of speech (for the most part) 5. Independent judiciary. 6. Corporate Governence 7. Civil Rights.

    Now I am sure we all wish the tycoons had less influence, or that the CE was smarter, but let’s be clear we operate one country two systems and for Beijing they focus on the one country bit and not much else. We don’t have to fund defence, or or any of the international services so that keeps expenses down and taxes lower. The mainland is jealous of the HK system, but I have been here long enough to remember the British system, and I don’t remember voting for the governor do you? Chris Patten was appointed by the UK Foreign Office. No nomination, no vote.

    So now to property, this is a system that has made many many people rich. Not just the tycoons. My secretary who lives in Tuen Muen bought her apartment for one million it’s now worth three million. She doesn’t want you messing with the property market any more than the big developers do. I wish I had bought years ago but I could afford to, and I still can’t, my loss. If the HK government opened up lots of land and forced the building of property then prices would drop dramatically. The people to suffer would not just be the property tycoons but our friends and family, our colleagues at work with young kids. Again, it’s not a perfect system but to dismantle it now would destroy the foundations of HK.

    As a British citizen and a permanent resident here I am lucky and I do have a choice. I choose to stay. I wouldn’t live anywhere else!

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