Top executives in Hong Kong believe it is better to axe jobs than cut wages during an economic downturn, an Asia-wide survey of business chiefs has revealed.
In a poll of executives from 10 Asian countries, bosses from nine said they would opt for pay cuts, while most SAR executives preferred to lay people off.
However, the survey also found that more than 80 per cent of top SAR executives believe employers should forgo bonuses if they were forcing wage restraints on workers.
High-profile battles between workers and companies - such as at Hongkong Telecom, where a 10 per cent pay cut was proposed - have been in the spotlight recently but are not the only reason managers may prefer to cut jobs.
Economists said the survey showed executives in Hong Kong were struggling to cope with deflation after years of inflation.
Employers could be keen to reduce staffing levels to shave contribution costs to the new Mandatory Provident Fund, to be introduced in 2000.
Hongkong Bank senior international economist Chi Lo said another reason could be the so-called boom 'bubble' experienced in recent years, which had created excess jobs.