Wage and payroll statistics for June 2020

Overall wage and payroll statistics
 
     According to the figures released today (September 25) by the Census and Statistics Department (C&SD), the average wage rate for all the selected industry sections surveyed, as measured by the wage index, increased by 1.3% in nominal terms in June 2020 over a year earlier.
 
     About 51% of the companies reported increase in average wage rates in June 2020 compared with a year ago. 47% of the companies recorded decrease in average wage rates over the same period. The remaining 2% reported virtually no change in average wage rates.
 
     After discounting the changes in consumer prices as measured by the Consumer Price Index (A), the overall average wage rate for all the selected industry sections surveyed increased by 0.6% in real terms in June 2020 over a year earlier.
 
     As for payroll, the index of payroll per person engaged for all the industry sections surveyed increased by 2.2% in nominal terms in the second quarter of 2020 over a year earlier. 
 
     After discounting the changes in consumer prices as measured by the Composite Consumer Price Index, the average payroll per person engaged increased by 0.8% in real terms in the second quarter of 2020 compared with a year earlier.
 
     The wage rate includes basic wages and other regular and guaranteed allowances and bonuses. Payroll includes elements covered by wage rate as well as other irregular payments to workers such as discretionary bonuses and overtime allowances. The payroll statistics therefore tend to show relatively larger quarter-to-quarter changes, affected by the number of hours actually worked and the timing of payment of bonuses and back-pay.
 
Sectoral changes
 
     For the nominal wage indices, year-on-year increases were recorded in all selected industry sections in June 2020, ranging from 0.6% to 2.6%.
 
     For the real wage indices, year-on-year increases were recorded in all selected industry sections surveyed in June 2020, ranging from 0.3% to 2.0%, except the transportation section and personal services section which remained virtually unchanged when compared with that in June 2019.
 
     The year-on-year changes in the nominal and real wage indices for the selected industry sections from June 2019 to June 2020 are shown in Table 1.
 
     As for the nominal indices of payroll per person engaged, year-on-year increases ranging from 0.2% to 4.6% were recorded in all industry sections surveyed in the second quarter of 2020, except the manufacturing section; transportation, storage, postal and courier services section and accommodation and food service activities section where year-on-year decreases ranging from 0.9% to 3.9% were recorded.
 
     For the real payroll indices, year-on-year increases ranging from 0.3% to 3.2% were recorded in the sewerage, waste management and remediation activities section; information and communications section; financial and insurance activities section; real estate activities section and social and personal services section in the second quarter of 2020. Yet, the professional and business services section remained virtually unchanged when compared with that in the second quarter of 2019 while the other industry sections surveyed recorded year-on-year decreases of 0.7% to 5.2%.
 
     The year-on-year changes in the nominal and real indices of payroll per person engaged for selected industry sections from the second quarter of 2019 to the second quarter of 2020 are shown in Table 2. The quarterly changes in the seasonally adjusted nominal and real indices of payroll per person engaged between the second quarter of 2019 and the second quarter of 2020 are shown in Table 3.
 
Commentary
 
     A Government spokesman noted that overall wages continued to increase in nominal terms in June 2020 over a year earlier, but the rate of increase decelerated further to the slowest in more than a decade as the COVID-19 pandemic continued to weigh on a wide range of economic activities. After discounting for inflation, overall wages increased modestly in real terms over a year earlier.
 
     The nominal growth in payroll per person engaged, which also covers discretionary bonuses and other irregular payments, likewise saw a deceleration in the second quarter of 2020 to the slowest in close to a decade. Payroll per person engaged in transportation, storage, postal and courier services, and accommodation and food service activities saw enlarged declines, and those in other major sectors either switched to decline or saw decelerated growth.
     
     The spokesman added that the latest figures indicated the situation up to June only and have yet to reflect the impact of the third wave of local epidemic which started in July. Looking ahead, while the local epidemic situation has stabilised of late, the earnings situation will still face downward pressure in the near term as the global pandemic is still evolving and the overall economic situation remains weak. The Government will continue to monitor the developments closely.
 
Other information
 
     Both wage indices and payroll indices are compiled quarterly based on the results of the Labour Earnings Survey (LES) conducted by the C&SD. 
 
     Wage statistics are conceptually different from the payroll statistics. Firstly, wage rate for an employee refers to the sum earned for his normal hours of work. It covers basic wages and other regular and guaranteed allowances and bonuses, but excludes earnings from overtime work and discretionary bonuses, which are however included in payroll per person engaged. Secondly, the payroll index of an industry is an indicator of the simple average payroll received per person engaged in the industry. Its movement is therefore affected by changes in wage rates, number of hours of work and occupational composition in the industry. In contrast, the wage index of an industry is devised to reflect the pure changes in wage rate, with the occupational composition between two successive statistical periods being kept unchanged. In other words, the wage index reflects the change in the price of labour. Thirdly, wage index only covers employees up to the supervisory level (i.e. not including managerial and professional employees), whereas payroll index covers employees at all levels and proprietors actively engaged in the work of the establishment. Because of these conceptual and enumeration differences between payroll and wage statistics, the movements in payroll indices and in wage indices do not necessarily match closely with each other.
 
     It should also be noted that different consumer price indices are used for compiling the real indices of wage and payroll to take into account the differences in their respective occupation coverage. Specifically, the Composite Consumer Price Index, being an indicator of overall consumer prices, is taken as the price deflator for payroll of workers at all levels of the occupational hierarchy. The Consumer Price Index (A), being an indicator of consumer prices for the relatively low expenditure group, is taken as the price deflator for wages in respect of employees engaged in occupations up to the supervisory level.
 
     Detailed breakdowns of the payroll and wage statistics are published in the "Quarterly Report of Wage and Payroll Statistics, June 2020". Users can download this publication free of charge from the website of the C&SD (www.censtatd.gov.hk/hkstat/sub/sp210.jsp?productCode=B1050009).
 
     For enquiries on wage and payroll statistics, please contact the Wages and Labour Costs Statistics Section (1) of the C&SD (Tel: 2887 5550 or email: wage@censtatd.gov.hk).