We Simply Must All Share the Pain

[FlexibleResponse]

We Simply Must All Share the Pain

2003 was the SARS year in which CX staff was asked to give up 4 weeks pay (later reduced to three weeks pay) to the Company so they could meet the cost of new aircraft repayments without dipping into cash reserves.

At the end of the year as a robust return to profit was realized, this contribution was returned to the staff. Also a two weeks ex-gratia bonus was given in lieu of the contract benefit of a 13th month bonus that is expected in a “normal year”.

The Cathay Pacific Annual Report for 2003 reveals that the top three Directors awarded themselves pay rises of between $1m and $2m each for their magnificent efforts in 2003.

Well done, chaps!

[Shot messenger]

Damn fine show!

HOORAH!!!!

[christep]

Erm, well my reading of it says:

- rises in total remuneration of between 0.5M and 2.5M (HK$, let's be clear) and not being sure how this is calculated, it seems to me perfectly plausible that this could be due entirely to share price fluctuations

- they didn't "award themeselves": the remuneration committee consists of two independent non-execs plus the Chairman. Yes the INEs are all from the same little clique of HK bigwigs, but they aren't Cathay people otherwise.

And I must admit as a businessman pax I was slightly surprised to see just how much the highest paid "flight staff" get... there are (still) nearly 200 with packages over HK$3M (US$400K) per year. I suspect this excludes all the travel perks for family and friends.

I picked the wrong career... :(

[Felix Lighter]

Yes there are still just over 200 BUT those numbers are reducing with retirement and are not being 're-filled' as the rest of us, who joined after 93, are on a lesser contract.

Most of us in CX will never make more than 1.5mil (US$190k), assuming we stay for 20yrs and live in HK throughout.

I dont know what business youre in but most of my non-CX expat friends (lawyers, accountants, financial types and event mangers) are on easily more than that already.........and theyre not even 35!

Perhaps its me thats in the wrong career?

No complaints with your post........... just making sure all the facts are on the table.

By-the-by, its easy to run an airline when the market is good and the fuel prices are low............ 12mths ago, we were all in limbo, things were dire indeed. Quite frankly I think the top-dogs at CX did a very good job last year - but then again thats what theyre paid to do isnt it?

[christep]

I guess it just goes to show that there's no such thing as a "generic" expat. I'm in telecoms with about 15 years experience and my total OTE package is about HK$1.5M, but 30% of that is essentially commission, and times are not good in the telecomms business, so I'm not getting that much.

I only know of one expat friend who is on a package significantly bigger than mine and that's because his company is new here and believed all the bull**** from the relocation agents and rent him a manison on The Peak. All my other "expat" (i.e. non-Chinese) friends are, like me, on pretty much the same payscales as locals.

The expat lawyers, finance people etc. with their outrageous packages are a slowly dying breed. Although these professions get far more than average in pretty much any city in the world - there is just an unusually high density of them in HK so they are more noticeable.

By the way, the median HK salary is approximately HK$100K (US$12K) per year. And the average holiday allowance is about 12 days.

(oops - fairly major edit - did I really write that my package was US$1.5M? In my dreams... :) )

[Felix Lighter]

Ive always enjoyed your posts, its great to hear opinions from the other side of the fence.

fyi:

2nd officer: US$49k
junior 1st officer: US$76
senior 1st officer: US$101k

housing is on a use it or lose it basis (ie: you cannot use the full amount to supplement your income)...so add to the above "plus free housing" (minus tax on your housing allowance)

NB: a new joiner will be a 2nd officer for 3 years and it takes 5+yrs to become a senior 1st officer.

as a newbie, with family/kids, i'm sure youd agree US$49k is not a lot in HK, esp for 3yrs

the "top 200" maybe sitting pretty but the other 1650 are around/about your stated HK average.

please dont get me wrong, i still think the package is attractive/good, its just no where near as much as the general HK population think and the scmp regularly quotes eg: cathay pilots, some of whom earm HK$5million.....blah, blah.

rgds

[christep]

Thanks for the compliment.

I've edited my post above - not sure how I wrote that my OTE package is about US$1.5M when, of course, it is about HK$1.5M (=US$190K), and I'm actually getting about US$150K in the current state of the market...

Thanks for the details on the salary scales. I'm assuming the housing allowance might be something inthe range HK$15K-30K per month depending on seniority? In which case the SO package (excluding travel perks for family/friends) is equivalent to about HK$45K/month gross. This is still over four times the median HK income, and well over double the average HK household income.

But I agree, for the "expat lifestyle" the SO salary is sufficient but not huge (although we have "expats" with several years experience in my company making less). It's also harder after the immigration rule change last year that makes it harder for wives/husbands to supplement that income.

What about school fees, by the way? If they are reimbursed as well that would make quite a difference.

[Schrodingers Cat]

christep, I assume in your job you must be prone to 'market forces'. There is no doubt that CX would LOVE to pay their pilots less, (remember in our industry there are some pilots in the states with 2nd officer hours paying to fly!), but to recruit the RIGHT guys to carry out the task to come to Hong Kong, one of the most polluted places on the planet, leave all your family and friends, (until they want to come out for a holiday), and submit your family to the numerous stresses of Hong Kong life, these are the going rates. Market forces apply.
(Before shortly jumps in with how many apply for each CX position, I did say the right guys, a brief look at the command failures on CXF proves my point, or has everyone forgotten how many failed the initial course when ASL was first set up...........):rolleyes: :ooh: :rolleyes:

[christep]

If you believe HK is one of the most polluted cities on the planet then I respectfully suggest that you need to travel a bit more. Pretty much all Chinese and Indian cities, Manila, Bangkok, even Los Angeles are worse. If the term "pollution" extends to include littering and graffiti then most major UK cities are as well.

I am here through choice, not particularly for the money (which is fine, but not particularly better than I could get anywhere else). I don't find the city stressful at all - it's one of the easiest places to live that I know. (And I have lived in London, Moscow, Stockholm, Taipei, Brussels, and know a number of other places pretty well.) It is the only major city I know where I can live in the centre and walk out of my door and onto some good hiking trails within 20 minutes (and some great ones within an hour).

Market forces lead to local recruits - I guess it's only a matter of time before expats (defined by package, not by race) become a thing of the past on Cathay. This is happening in my industry as well: the "colonial" days are fast disappearing. We have lots of people in Asia-Pac who were born elsewhere, but the vast majority of them are on the same payscales/packages as the locals.

Just out of curiosity, how many of Cathays flight crew are "pure" local recruits these days (which doesn't have to mean just local Chinese - I assume that there are a few nth generation immigrants whose families were from other places too...)?

[Guru]

I believe there are around 200 local pilots in the Company.

[Schrodingers Cat]

Hmmmmm, missing the point or being wilfully obtuse...haven't quite decided yet...... There is no doubt that local pilots will eventually form a large part of the CX workforce, piloting ability has nothing to do with race, color, or ethnic origin. However the pool of pilots available from Hong Kong itself is really quite small, either through eyesight requirements or just not being able to attract the 'right' personnel. Although there are a large number of applicants, there are not that many who can fit the profile, and a corollary of the increasing good economic news means a concomittent reduction in high calibre recruits. As ever this means recruiting from overseas, and paying people to overcome the disadvantages of leaving home.......as recorded above. When the governments own pollution index has often put the pollution as 'high' meaning even those perfectly healthy are at risk, (remembering that for convenient reasons the recordings are 10 metres up and not at street level, where the fumes can make your eyes water and throat sting downtown), I suggest that comparison with other cities is self serving sophistry.......:cool:

[spannersatcx]

Whilst I don't begrudge anybody their salary, after all we make our own choices in life. What I do find grating is the fact that 'they' have been awarded these increases.

When we pulled our belts in and worked our proverbials off covering the 'voluntary'! SLS scheme, trying amongst other things to keep the company going. At the end of the year when our non negotiable pay awards were given out, we are told there is no money for payrises!

When you consider over the last 3 years we have received a token 1% a few years a go so effectively my pay has been cut by something like 10% in real terms, what effect can this have on morale, why should I bother, should I go that extra mile, should I really give a toss. With things like this I think not. Double standards come to mind.


Perhaps that's why so many are leaving at a certain outport, not too far from Paddington! Not a very happy outport person that's for sure! :mad:

[christep]

Schrodinger's Cat: I haven't the time at the moment to go and check out comparative pollution stats in detail, but my perception is that the roadside pollution in Central is no worse than any other major city with that density of traffic, and much, much better than some. (Have you ever stood beside a street in Makati or Bangkok in the rush hour?)

My point is not that there are sufficient local resources available in HK, but that in other industries it is now proving unnecessary to "bribe" people to come to HK - there are plenty willing to come because that's where they want to be. The (local) salaries are relatively high; the tax saving is huge; it's a great place to be based to see Asia; and the overall quality of life (less than perfect air quality notwithstanding) is excellent.

Spannersatcx: just for comparison, my last payrise was in 1999 (and that was due to a promotion, not a movement of the scales). The last time I got a payrise without change in job responsibilities was in 1992. In 2003 my guaranteed pay dropped by 12% when all people in my company with revenue responsibility had their packages changed (without discussion) from 80/20 (guaranteed/commission) to 70/30. The "my pay must go up in real terms every year" line sounds like something out of British Leyland and "Red Robbo" in the UK in the 70s. And look what happened to them.

[404 Titan]

christep

Spannersatcx: just for comparison, my last payrise was in 1999 (and that was due to a promotion, not a movement of the scales). The last time I got a payrise without change in job responsibilities was in 1992. In 2003 my guaranteed pay dropped by 12% when all people in my company with revenue responsibility had their packages changed (without discussion) from 80/20 (guaranteed/commission) to 70/30. The "my pay must go up in real terms every year" line sounds like something out of British Leyland and "Red Robbo" in the UK in the 70s. And look what happened to them.
I think you have just explained one of the reasons why HK has been in a state of deflation for the last seven years. What has happened to you has generally happened to the wider Hong Kong population. Deflation is not sustainable and can only be stopped by getting people to spend again. People will spend again only if they feel confident in the economy, have a secure job with disposable income. Deflation certainly doesn’t lead to confidence because people will defer spending on unnecessary items in the hope they will be cheaper tomorrow. This leads to job insecurity and less disposable income in the wider community. In the ideal world all workers would be getting small pay rises every year. This would make people buy today because tomorrow it may be more expensive. This leads to job security because businesses are busy and people generally have more disposable income.

Also just as a comparison with yourself, some pilots at CX since 1993 have had their pay and conditions cut by about 40% or more. This type of a reduction of conditions and pay isn’t sustainable anywhere in the long run.
:*

[BusyB]

Christep,

Over the years you have made many well-reasoned and useful arguments. Unfortunately this time you appear to want everyone to be treated the same as you are. You may be content with your lot, that is your right, but that doesn't make a valid reason for others not to want to improve theirs.

There is a constant whittling away of conditions within CX, some items can go but others seem more like cutting an engines running cost by not putting a little oil in it!!

[christep]

I'm not arguing that others should be treated the same as me. Being in the telecoms industry we have suffered more than most in the last 3 years or so (although the 1990s were the reverse - money was no object). But my observation is that more and more industries are rapidly reducing the number of expats (in the traditional sense) on their books in Hong Kong. Of the non-Chinese that I know reasonably well here (at a quick guess I suppose that's 50 people) I know of only two on pure expat packages (housing allowance, COLAs, tax equalisation, school fees, etc.), one on a diplomatic posting package (similar) and perhaps half a dozen who have a few perks but whose package isn't that different overall. The rest of us (over 75% certainly) are on pure local packages, and only about a third of them are in the telecoms business.

Am I happy that when I moved from being an expat to being local I had to move from my $50K per month apartment with roof terrace and stunning view to one without either? No, of course not. But on balance (and also having some P&L responsibility for the business) did I really have cause to complain? Not really. Would I like to earn more money? Of course, and I have colleagues who have tripled their package by going to run projects in Nigeria and Iraq. Now that is real hardship - moving to HK for many people is no hardship at all.

Now Cathay management have to do whatever they think is necessary to get the best people (and as a shareholder I have no quibbles at all with the results of the company in the last few years - the management has done a great job) but at some point it may become very difficult for them to justify to their shareholders and investors employment practices which are far away from the norm.

(As a pax I just wish they hadn't decided to withdraw First class from a load of routes in the coming months, and that they hadn't cut back the quality of the business class wines so much (Jacob's Creek is not a "business class" wine), and also that they would be slightly more generous with the mileage benefits, which are way down on similar schemes and lead to oddities like me demonstrating my loyalty to CX through AAdavntage! But that's a whole different discussion.)

[Omark44]

Better not go down to Australia of you don't like Jacobs Creek wines then. They produce a range that, at the bottom, rates 'drinkable' right through the spectrum to wines that arguably are some of the best you can get and some of their better Champagnes are on a par with anything coming out of France but at a fraction of the cost!:D

[christep]

I've nothing against Jacob's Creek per se, but the stuff they serve in CX J (Reserve Chardonnay) is towards the bottom end of the range.

Very crudely, if you had to put the CX Y, J & F wines on a scale of 1-10 where 10 is the best quality then currently Y is 2, F is 9.5 (both fair enough) but J is about 3.5 when it really ought to be 6 or 7 to line up with the relative positioning of the rest of the J product.

But we're way off topic here - sorry.

[Schrodingers Cat]

Anthing but off topic christep......please refer to the topic heading, it applies to SLF as well...........:D :p :D

[Freehills]

An observation I have is also how poor standard of living is becoming "back home" unless you already own a decent property given how expensive they now are for housing. Both London & Sydney strike me now as poor places to live, unless you are rich or young. (And just about anywhere is a good place if you are rich or young!)

Seriously - I wouldn't want to have a job in London unless it was on an expat package