Singapore’s top executives are making more money than those in Hong Kong, with the gap expected to widen as living costs in the island republic rise, according to human resources consultant Towers Watson & Co. (TW:US)
Senior executives in Singapore earned 19 percent more than their Hong Kong counterparts in 2013, a gap that has widened to the most in at least three years, according to Sambhav Rakyan, global data services practice leader for Asia Pacific at Towers Watson. In the top positions, that exceeded 30 percent, he said.
“Singapore is going to be more expensive to live in,” Rakyan said in an interview yesterday. “You need to compensate for the higher cost of living in the particular country. The implications are also in terms of the tax rate,” as companies pay more to make up for higher personal income taxes in Singapore, he said.
Singapore ranked one spot above Hong Kong as the fifth-most expensive location for expatriates out of 214 cities in Mercer LLC’s 2013 Cost of Living Rankings. Singapore’s top marginal tax rate on personal income is 20 percent, compared to Hong Kong’s 15 percent.
The Southeast Asian nation is also Asia’s most expensive city for luxury homes after Hong Kong, according to Knight Frank LLP. While housing values dropped 4.3 percent from their high in Hong Kong, according to Centaline Property Agency Ltd.’s index, government data showed prices in Singapore slipped just 0.9 percent last quarter from its peak.
Hong Kong is the world’s best place for doing business, according to Bloomberg Rankings. Singapore’s ranked No. 4, also trailing Canada and the U.S. Singapore is forecast to be the world’s third-most competitive city by 2025, ahead of Hong Kong at fourth, according to a report by the Economist Intelligence Unit commissioned by Citigroup Inc.
The expansion of Singapore’s private banking industry and the presence of regional hubs of global companies have drawn more top talent and boosted the pay of the so-called C-suite, which includes chief executive officers, chief financial officer and other senior managers.
The rising costs in Singapore led the government to announce a S$9 billion ($7 billion) spending package last week on health care and other benefits for the elderly, while providing companies with more funds to increase efficiency as the economy adjusts to a tighter labor supply.
The island’s unemployment rate held at 1.8 percent in the three months through December, matching a five-year low reached in the last quarter of 2012. Singapore said in September it would widen foreign-worker curbs to professional jobs as the government clamps down on companies that hire overseas talent at the expense of local citizens, stepping up efforts to counter a backlash against immigration.
Hong Kong’s unemployment rate for the three months ended January fell to 3.1 percent from 3.2 percent in the last period, the government said in a statement on Feb. 18.
“The talent gap is still quite high,” Rakyan said. “Companies feel that at the top level, if they can have someone who is more experienced and understands their business strategy, it’s worth bringing them onboard. So we will continue to see a lot of expat talent.”
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