Annual bonuses fall victim to hard times

10:37, January 03, 2010      

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Sitting in the grand, but quiet, hotel lobby, Xie Yixin sighed.

The saleswoman for the foreign-owned five-star property in Shanghai's Pudong was gloomy about her bonus prospects given the dwindling patronage at the hotel.

"I guess my annual bonus for last year will drop at least 10 percent, as our reservations and walk-in customers have seen a steep fall over the year," said Xie, who has been working for five years. "That comes on the back of a bad 2008, when my bonus was slashed by half."

Indeed, since the global financial crisis hit most industries, annual bonuses - which are typically paid around Spring Festival in China - have taken a plunge.

And employees at foreign firms are bearing the brunt of the economic hardship.

Linda Qu, a human resources manager at RadiSys, a US firm that develops embedded computing products, said that the staff's annual bonus will be trimmed by up to 20 percent. "We were little affected in 2008, but the information technology industry failed to escape the impact in 2009," Qu said.

RadiSys said in July that it plans to lay off 119 employees and transfer its Oregon-based manufacturing operations to its partners in Asia to cut costs.

"During the first several months (of the financial crisis, which began in late 2008), firms in hi-tech and automobile industries were among the sectors worst hit," said Stell Hou, leader of Broad Based Compensation Practice at human resources outsourcing provider Hewitt Associates.

Hou pointed out that even though China has been a bright spot for most foreign firms, the country has not been immune to the global economic meltdown.

An engineer surnamed Cheng, who works at EMC Corporation, said a 10-percent cut in annual bonus does not sound bad, given the dire straits employees face at the company's overseas branches.

"As a matter of fact, we Chinese employees feel lucky to just take a bonus cut as there have been large-scale layoffs amid salary cutbacks in our overseas branches," Cheng said. EMC is a Fortune 500 company that provides information infrastructure systems, software and services.

"In 2010, we hope everything will return to the pre-crisis situation," Cheng added.

However, providing a bright spot in the gloom are companies in the medical and fast-moving consumer goods (FMCG) sectors that are counter-cyclical.

"The final figure for the annual bonus has not yet been announced, but given our strong business growth, at least our sales team may get more than during last year," said Jacqueline Tan, a human resources officer at Leica Microsystems, a medical instruments maker based in Germany.

Tan said the company expects its China sales to increase 30 percent in 2009 from the previous year and "our bonus, on average, will not see any drop".

Charles Gao, associate director of Adecco, one of the world's leading human resources companies, said the medical industry, along with FMCG and luxury retail sectors would see at least 20 percent sales growth in 2009. Accordingly, the annual bonuses in these industries will range from 10 percent to 25 percent of annual salaries, he said.

In addition, unlike foreign firms that lay stress on monthly remuneration, home-grown companies will give out much higher bonuses, reaching up to 50 percent of annual salaries, Gao said.

A survey by China Daily's Mobile News that attracted around 5,000 respondents showed that State-owned firms give their employees much bigger bonuses than foreign firms operating in China.

Source: China Daily
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