Third of firms 'plan executive pay freeze'

PUBLISHED : Wednesday, 04 November, 1998, 12:00am
UPDATED : Wednesday, 04 November, 1998, 12:00am

Nearly one in three firms plan to freeze pay for executives next year, with the rest giving rises of no more than three per cent, according to a survey of leading companies released yesterday.

But most firms contacted appeared to be taking a wait and see attitude and might decide to freeze pay once they saw others doing so even if they could afford to do otherwise, officials who conducted the survey warned. The poll was carried out by the Hong Kong Institute of Human Resource Management.

'We cannot rule out a sheep-herd mentality. We don't know how many companies will be copycats, but we suspect some companies will look at others in the industry,' institute president Ma Ping-on said.

Of 57 firms contacted only 33 indicated their plans. Seventeen indicated they would freeze pay and the remainder said they planned to give rises of two to three per cent.

More companies would move towards freezing pay partly due to copying others and partly because of their financial performance, poll officials said.

Pay rises were unlikely to be across-the-board and would probably be differential and performance-based, said Patrick Maule, chairman of the institute's remuneration and research committees. No company had said it would cut salaries, Mr Maule said.

Although opposed to pay cuts because they affected staff loyalty, Mr Maule supported wage freezes if they were necessary for firms to stay competitive.

'The imperative for giving rises no longer exists.

'There are lots of bargains on the high street . . . to be competitive, we've got to tighten our belts,' Mr Maule said.

But unionist legislator Lee Cheuk-yan said: 'Are things really cheaper across the board? If you look at the inflation rate, it is 2.7 per cent.' Although the survey did not pose questions on bonuses, Mr Maule said he believed most firms would award bonuses this year but most were likely to be on a selective basis, rewarding only the best performers.

The survey looked at staff earning at least $15,000 a month.