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Payroll and Wage

The following types of wages and earnings statistics are currently compiled from establishment statistical surveys : wage indices; indices of payroll per person engaged; salary indices; and distribution of monthly/hourly wages. The wage indices and indices of payroll per person engaged are compiled from the Labour Earnings Survey on a quarterly basis. The wage indices reflect changes in the price of labour for workers up to supervisory level while the indices of payroll per person engaged measure changes in average employment earnings of personnel at all levels. These statistics are useful for monitoring short-term changes in the labour market in respect of employers' labour costs. The salary indices are compiled from the Survey of Salaries and Employee Benefits – Managerial and Professional Employees (Excluding Top Management) on an annual basis, and reflect movements of salary rates of middle-level managerial and professional employees. Distributions of monthly and hourly wages are obtained from the Annual Earnings and Hours Survey. They are essential inputs for analyses related to Statutory Minimum Wage.

Payroll covers basic wages and salaries, bonuses and gratuities, commissions, allowances and cash payments in other forms paid directly to employees as well as other irregular payments to workers such as discretionary bonuses and overtime allowances. The nominal index of payroll per person engaged indicates the overall movement of average labour earnings. The real index of payroll per person engaged, obtained by deflating the nominal index by the Composite Consumer Price Index, indicates changes in the purchasing power of labour earnings.

Wage rate reflects the “price” of labour and refers to the amount of money paid for normal hours of work. It includes, apart from basic wages and salaries, cost-of-living allowance, meal allowance/benefit, commission and tips, good attendance bonus, shift allowance, guaranteed year-end bonus/payment, and other guaranteed bonuses and allowances. However, pay for overtime work is excluded. The nominal wage index measures the pure changes in wage rates unaffected by changes in industrial and occupational structure between two successive reference months. The real wage index, obtained by deflating the nominal wage index by the Consumer Price Index (A), indicates changes in the purchasing power of the amount of wages earned.

Salary rate is defined to include monthly basic salary, cost-of-living allowance, guaranteed year-end bonus/payment, commission and other regular and guaranteed bonuses and allowances.  The Nominal Salary Index (A) measures the overall changes in average salary rates of middle-level managerial and professional employees.  The Nominal Salary Index (B) measures changes in average salary rates of those middle-level managerial and professional employees who have been in the same occupation and in the same company in 2 consecutive years.  It therefore only accounts for salary changes brought about by general increment, meritorious increase and gain in seniority.  The Real Salary Index (A) and the Real Salary Index (B) are derived by deflating the respective nominal indices by the Consumer Price Index (C) and measure changes in the purchasing power of the amount of salaries earned.

Hourly wage and monthly wage distributions compiled from the Annual Earnings and Hours Survey follow the definition of wages as adopted in the Employment Ordinance. In brief, the following components are covered : (i) basic wage; (ii) commission and tips not of gratuitous nature; (iii) guaranteed bonuses and allowances other than end of year payment; and (iv) overtime allowance.

Glossary of Terms

Term
Definition
Hourly wage
Hourly wage is derived by dividing (i) the amount of wages paid to an employee in the wage period related to hours worked, i.e. wages paid after deducting payments related to rest days and meal breaks which are not regarded as working hours by (ii) number of working hours in the same wage period, which is the sum of the contractual/agreed working hours (including meal breaks which are regarded as working hours according to the employment contract or agreement with the employer) and overtime hours worked at the direction of employers.
Manual workers at construction sites
Manual workers at construction sites refer to skilled, semi-skilled and general workers working at those sites on the survey reference date.
Median hourly wage
By arranging the hourly wages of all employees from the smallest to the largest value, the median hourly wage is the hourly wage of the employee who ranks in the middle of all the employees concerned. In other words, the median hourly wage is the hourly wage value that delineates the lowest 50% of all the employees concerned.
Nominal Index of Payroll per Person Engaged
The Nominal Index of Payroll per Person Engaged can generally be used to indicate changes in average earnings of employees provided that the employment structure remains relatively stable over time.
Nominal Salary Index (A)
The Nominal Salary Index (A) measures the overall changes in average salary rates of middle-level managerial and professional employees.
Nominal Salary Index (B)
The Nominal Salary Index (B) measures changes in average salary rates of those middle-level managerial and professional employees who have been in the same occupation and in the same company in 2 consecutive years. It therefore only accounts for salary changes brought about by general increment, meritorious increase and gain in seniority.
Nominal Wage Index
The Nominal Wage Index measures the pure changes in wage rates of employees up to supervisory level (that is, managerial and professional employees are not included) by holding constant the structure of the labour force with respect to industry, occupation and sex between two successive rounds of the survey.
Payroll
Payroll includes elements covered by wage rate (see relevant definition) as well as other irregular payments to workers such as non-guaranteed or discretionary cash bonuses and allowances (e.g. profit-sharing bonuses and long service bonuses), overtime payment and back-pay. Employers' contribution in respect of their employees paid to social security and pension schemes, and benefits received by employees under these schemes are excluded. Profits earned by proprietors and business partners, payments in kind (e.g. quarters provided by company), severance payments, termination payments and long service payments, pensions and payment to outworkers are also excluded.
Payroll per Person Engaged
Payroll per Person Engaged is derived by dividing the total payroll of the reference period by the total number of persons engaged as at the survey reference date.
Percentile hourly wage
The pth percentile hourly wage is the hourly wage value which delineates the lowest p% of all the employees concerned, where p can be any integer value from 1 to 99. For instance, the 10th percentile hourly wage is the hourly wage value that delineates the lowest 10% of the employees. The 25th percentile, 50th percentile and 75th percentile hourly wages are also known as the lower quartile, median and upper quartile hourly wages respectively.
Real Index of Payroll per Person Engaged
The Real Index of Payroll per Person Engaged, obtained by deflating the nominal index by the Composite Consumer Price Index, indicates changes in the purchasing power of labour earnings.
Real Salary Index (A)
The Real Salary Index (A) is derived by deflating the corresponding nominal index by the Consumer Price Index (C) and measure changes in the purchasing power of the amount of salaries earned.
Real Salary Index (B)
The Real Salary Index (B) is derived by deflating the corresponding nominal index by the Consumer Price Index (C) and measure changes in the purchasing power of the amount of salaries earned.
Real Wage Index
The Real Wage Index, obtained by deflating the Nominal Wage Index by the Consumer Price Index (A), indicates changes in the purchasing power of the amount of wages earned.
Salary Indices
Salary indices are compiled to measure changes in salary rates of middle-level managerial and professional employees in both nominal and real terms.
Salary rate
Salary rate is defined to include monthly basic salary, cost-of-living allowance, guaranteed year-end bonus/payment, commission and other regular and guaranteed bonuses and allowances. The remuneration for managerial employees and professionals is usually coined as salary instead of wage though they have more or less the same components.
Wage rate
Wage rate reflects the “price” of labour. It refers to the amount of money paid for normal hours of work and thus usually relates to a time unit such as an hour, a day, a week or a month. It includes, apart from basic wages and salaries, cost-of-living allowance, meal allowance/benefit, commission and tips, good attendance bonus, shift allowance, guaranteed year-end bonus/payment, and other guaranteed bonuses and allowances. However, pay for overtime work is excluded.