The threat of traffic chaos that hung over passengers for two days receded yesterday when four bus companies reached a last-minute deal in their pay dispute with 12,000 drivers.
After six hours of negotiation, the KMB group, which operates Kowloon Motor Bus and Long Win Bus, agreed to give its 8,000 drivers a pay rise of 1.4 per cent from June 1, plus a one-off bonus of $250.
NWS Holdings, which owns Citybus and New World First Bus, offered a pay rise of 1.8 per cent to those of its 4,000 drivers earning more than $9,000 a month, backdated to January, and an extra $165 a month to those on less than $9,000. But two unions representing half of its drivers have yet to decide whether to accept the offer and whether to cancel industrial action planned for Friday.
The Motor Transport Workers General Union, which mobilised 6,000 drivers at the four companies to work to rule between 10am and noon yesterday, said its industrial action, scheduled for today and tomorrow, had been cancelled.
The union had planned to stage another work-to-rule today during the 7am-10am and 4pm-8pm rush hours, which was expected to create long queues that would take hours to clear up. A strike was threatened if no consensus had been reached by tomorrow.
The companies' offers fell short of the drivers' expectations of 4.25 to 5 per cent, but the director of the union's KMB branch, Lam Shun-ping, said the drivers had considered passengers' interests.
'If we persist with our request it would create only more inconvenience to commuters and we don't want that. The percentage is all right. At least it covered part of our losses due to inflation,' he said.
KMB said the pay rise would increase annual costs by $42 million; New World First Bus and Citybus said it would cost $18 million.
Raymond So Wai-man, associate dean of business administration at the Chinese University of Hong Kong, said the bus companies were likely to transfer the burden to their passengers. 'Last year, KMB's labour costs stood at $2.9 billion, 46 per cent of KMB's expenses,' he said.
'A 2 per cent pay rise would bring the expenses to break the $3 billion mark, which means it will eat up 10 per cent of what KMB earned last year.'
He said that with this year's inflation at 'roughly 2 per cent, and now the pay rise, it is already sufficient for the operators to propose a fare increase' under the formula introduced in February to guide the setting of bus fares.
A spokeswoman for New World First Bus and Citybus said the two companies' net profit had fallen by 28 per cent in the face of competition and rising costs.
The Environment, Transport and Works Bureau said that besides the fare-adjustment formula, the government would consider other factors, including affordability and the quality of services, before approving any fare rise.