Hong Kong employees looking for sizeable pay increases could be in for a disappointment, as companies struggle with inflationary pressures, cost cuts and weaker earnings, according to a study by the UK-based consultancy WTW (Willis Towers Watson).
WTW has projected an overall pay hike in Hong Kong of 4 per cent in 2025, the same as the past two years, and the second-lowest in the Asia-Pacific region after Japan’s 3 per cent estimated increase. But data science and business intelligence professionals in the city could see an outsize increase of as much as 8.3 per cent amid surging demand for such talent “as these roles are needed across industries”, the study said.
Hong Kong companies were also looking for talent in human resources, particularly for key roles in ESG (environment, social and governance), and employee wellbeing and productivity.
“Employers are more conservative with their salary budgets as they look to longer-term stability in their employee base,” WTW said. “Those organisations that lowered salary budgets cited inflationary pressures, concerns related to cost management and weaker financial results as the leading causes.”
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The less than rosy salary outlook of many firms is reflected in Hong Kong’s economic performance. Although the economy grew at 3.3 per cent year on year in the second quarter, the expansion was mainly supported by exports, according to official data. The economy also faces challenges from elevated interest rates that are at a 23-year high and the slowdown in China. These have been reflected in the disappointing second-quarter results of many listed companies.
The reduced salary budgets come at a time when voluntary staff exits remain high in the city, compared with other Asian markets, the study noted. In Hong Kong, the attrition rate was 14.1 per cent in the last 12 months, significantly higher than Japan, South Korea, Taiwan and mainland China, where it ranged between 7.9 per cent and 11 per cent.
WTW, which conducted the salary budget planning survey between April and June, received nearly 32,000 responses from companies across 168 countries. In Asia-Pacific, 1,788 organisations responded, including 615 companies from Hong Kong.
Workers in India, Vietnam and Indonesia next year could expect the highest salary increments of 9.5 per cent, 7.6 per cent and 6.4 per cent, respectively. Meanwhile, employees in Australia, Singapore and Taiwan could see a 4 per cent increase, the same as Hong Kong.
In Asia-Pacific, pay hikes are generally moderating as “economic and financial concerns are causing organisations to revisit and revise their approach to their salary budget strategies”, according to the study.
The overall salary budget increase in the region has decreased from 5.9 per cent in 2023 to 5.7 per cent this year and is projected to be at 5.8 per cent in 2025.
“As AI and other technologies become more prevalent, employers need to consider how they can leverage these for their business, and whether they ought to train their workforce for it or recruit digital talent to facilitate digital transformation.”
