Ordinary Gweilo

In Saturday’s SCMP, Albert Cheng was complaining about the government’s lack of plans for digital radio in Hong Kong (subscription required):

In Hong Kong, a steering committee was set up in 1998 to look into digital radio. It was assigned to co-ordinate trial tests by public and commercial broadcasters. The test results have been satisfactory, proving beyond a doubt that Hong Kong is ready for digital broadcasting.

A government-commissioned consultancy study also confirmed that there would be a market demand for the new service. The only uncertainty was whether consumers could afford the new radios. The government, therefore, decided that the market should drive the introduction of digital broadcasting.

Since then, market conditions have ripened. The government has taken another step forward by suggesting that future digital broadcasters should be regulated by the current licensing framework. Existing broadcasters will be allowed to continue traditional broadcasting on the current frequencies.

In a nutshell, everything is ready for the city’s launch into a new era of digital broadcasting.

But at a recent meeting of the information technology and broadcasting panel of the Legislative Council, commercial radio stations were so desperate to safeguard their vested interests that they became illogical. One spokesman for Metro Broadcast urged the government to stifle the demands of the market in order to protect the station’s near- monopoly status.

Gosh, that would be a first in Hong Kong. 

Digital radio took a while to take off in the UK, and at first it seemed that the companies that had paid for licences had miscalculated, but now the prices of receivers has dropped significantly (I read somewhere that it was one of the most popular Christmas presents this year) and audiences are on the up.

The BBC has created a series of new channels (1Xtra, 6 Music, BBC 7, Asian Network, 5 Live Sports Extra) and commercial broadcasters have come up with new stations and made previously local-only stations available nationally.  Stations that were consigned to poor quality AM are now available on high quality digital.  Everyone’s a winner.   

Surely if Hong Kong people were given the chance to buy a digital radio for a few hundred dollars and get a much greater choice of channels, they would jump at the chance.

Mind you, in the UK there are so many channels squashed into the digital spectrum that the quality is actually worse than FM. 

Still on the subject of expat pay, Simon points out that David Webb has a letter on this subject in today’s SCMP.  He points out is that although it is widely-believed that Hong Kong has a simple flat-tax system there are actually plenty of ways to pay less tax, one of which is to provide a housing allowance, a common component of expat packages. He also thinks he has spotted some hypocrisy in this proposal:

If Deputy Secretary for Home Affairs Stephen Fisher is serious about denying permanent residency to anyone getting what he calls "expat packages" or "overseas terms", then would he please tell us how many civil servants of his grade or above receive housing, rental allowances, overseas education for their children, air-conditioning allowances and other perks from their employer?

What utter hypocrisy.

The form of remuneration should have no bearing on a person’s eligibility for permanent residency. Employers should be allowed to remunerate employees in whatever form they choose to recruit and retain talent, whether from Hong Kong or overseas, permanent resident or not. The total cost of compensation reflects the free-market value of an employee to an employer. How it is structured, in cash or benefits, is usually driven by other considerations.

The government should instead remove its fiscal incentive to structure packages. Employees should be taxed on the full value of all benefits received, including housing. Currently, housing or rent is only deemed to be worth 10 per cent of the value of the other income from the employer

Although Mr Fisher did say that the government would prevent people on "overseas terms" becoming Permanent Residents, this does not apply retrospectively, and I imagine that 99% of the civil servants on those terms have already become Permanent Residents and that very few (if any) generous packages like that are still on offer. 

"Those already on expat packages can continue on the existing terms of employment provided they remain in the same group of companies," he said.  "But after the law is in place, anyone recruited on overseas terms must have expertise that is not readily available in Hong Kong and that person must not be a Hong Kong permanent resident. If that person wants to remain on the overseas terms, he or she cannot become a Hong Kong permanent resident."

Anyway, it’s all nonsense if you ask me.  How do they define "overseas terms"?  As far as I know it is quite legal to offer local staff a housing allowance or any of the other benefits that expats may be given, so how can they tell who is on "overseas terms"?  Oh, by the fact that are foreigners, right?  No discrimination there, then.

Also, if this mythical expat wanted to become a Permanent Resident, all they need to do is re-negotiate their package, swapping some of the benefits for cash.  Pay a bit more tax and become a Permanent Resident.

The most puzzling story of the week is the one about the government outlawing expat pay packages. The SCMP ran this story (subscription required) on Wednesday:

Hong Kong companies will have to justify their offers of generous "expat packages" to foreign employees under an anti-racism bill now in an "advanced stage of drafting". They will have to prove the recruit has expertise not readily available in Hong Kong, and permanent residents will not be able to receive such special terms.

Are we really supposed to believe that although Hong Kong has no minimum wage, there is going to be legislation to stop companies paying staff more than they are worth? Seems unlikely.

There are (as far as I know) two types of "expat" job. The first is where a foreign company wants to have someone from Head Office on-site, and the second is where an expat has skills or experience that are not available locally. It is many years since Brits could work without an employment visa, and if you want to hire someone from abroad you already have to convince the Immigration Department that local candidates are not available before an employment visa will be issued (and rumour has it that a high salary makes it easier to convince them to grant the application). So why would anyone go to the trouble and expense of recruiting from abroad if there are local candidates who could do the job?

Not that you’d believe it from reading the letters in the SCMP. Here’s Harry Chen, who seems to have a chip on his shoulder:

I believe that it is time for the glorified expat salary packages to disappear. It is true that they are important to attracting to Hong Kong staff with talent and expertise, but at the same time the companies providing these expat packages are guilty of racial discrimination. A local Hongkonger educated in an Ivy League university and fluent in four languages would not be eligible for the same generous expat salary package that an American, with a lower educational level and no Asian language skills, demands.

Ask yourself if having these overpaid staff actually helps the economic situation of your typical Hongkonger. An expat company vice-president in Hong Kong would still be a department supervisor if he or she had stayed in their home country.

Isn’t this a myth? How many expat companies like that are there left in Hong Kong? Well, OK, there are a few companies left where all the top jobs go to expats, and very competent locals are stranded beneath the glass ceiling, but the good staff will leave and join employers who will give them more opportunities, and fewer and fewer companies can afford that luxury. Things are changing, and one high-profile example of this was Marks & Spencer, who decided to cut costs by getting rid of expat managers and ‘localizing’ instead. Hence you hear complaints from expats who find it difficult to get jobs because companies prefer locals (perhaps in the belief that expats expect higher salaries).

The fact is that the last ten years have seen a steep decline in traditional expat packages, and the main reason is the economy. As the economy picks up, a few companies will look abroad for staff with particular skills, but it seems very unlikely that we will ever see a return to the way things were ten years ago. There is absolutely no need for the government to legislate against expat packages, and I find it hard to believe that they would do so.

In Hong Kong it is common for offices to be open on Saturday morning, something that you would not find in the UK (or most other countries as far as I know), and hence we have public holidays on a Saturday (the cause of moaning from those who don’t have to work on Saturday). In fact, it’s not quite as bad as it might seem, because many people only have to work alternate Saturdays ("long week" and "short week").

However, I think that is a (very) gradual trend towards a five-day week. I know one company that used to open their office on Saturday but stopped doing so (though they asked staff to make up the hours during the week), and others that have "always" had a 5-day week. If you read the job adverts you will sometimes see this advertised as a benefit.

This week, Donald Tsang took everyone by surprise by announcing that the governments wants to introduce a five-day week for civil servants, but that they will still have to work 44 hours per week. Moving swiftly on without making any jokes about civil servants and work, this will surely accelerate the trend towards a five-day week in the private sector as well, which seems to have alarmed to "Pro-Business" lobby. Liberal Party leader James Tien rarely misses a chance to make a fool of himself, and this was a prime opportunity for him to say something stupid. He did not disappoint us (from The Standard):

James Tien, chairman of the pro-business Liberal Party, said the plan will create unnecessary pressure on the small-and-medium sized enterprises that account for about 90 percent of business firms in Hong Kong. "This will raise expectations of staff at private firms. And if some companies choose not to follow the government’s system, they will easily be branded `unscrupulous employers’," he said.

Tien called for the government to rethink the system as he believed it could drive more workers to spend weekend holidays in the mainland and thus hurt the retail and catering industry.

The last comment is priceless. Over the last ten years, Hong Kong and China have become much closer – there is a significant trend towards Hong Kong people spending the working week in China, PRC residents come to Hong Kong for shopping, and Hong Kong people pop across the border for shopping, eating and all manner of other services. It benefits both Hong Kong and China.

Does he really think that if all Hong Kong people had a whole two days off every week, 90% of them would flood across the border on Friday night to return only on Sunday? It seems rather unlikely, and a moment’s thought would tell him that there is hardly any difference between this and someone working in Hong Kong on Saturday morning and crossing the border the same afternoon.

Me, I’d welcome it if Hong Kong was a bit less crowded every weekend, but I can’t see it happening.