Local Hong Kong firms offering bigger pay adjustments to attract, retain talent
The average salary for employees in Hong Kong and the Greater Bay Area (GBA) saw a slight decrease in 2024, according to new data from the Hong Kong Institute of Human Resource Management (HKIHRM).
Hong Kong's average salary for employees decreased by 0.6 percentage points to 3.2% in 2024, with the actual increase being 1.4% after deducting inflation.
In nine cities in the GBA, the average base pay adjustment was 4.8%, down by 0.7 percentage point from 2023. This includes cities such as Shenzhen, Guangzhou, Zhuhai, Dongguan, Foshan, Huizhou, Zhongshan, Jiangmen, and Zhaoqing.
In terms of bonuses, 37.2% of Hong Kong companies said they have guaranteed bonus schemes for staff this year, while 83.9% have non-guaranteed bonuses for employees, according to the report.
For mainland firms, the report found that various incentives were on the table for employees, such as:
- Year-end bonuses (83%)
- Performance bonuses (67%)
- Project bonuses (40%)
Hong Kong salary adjustment
According to the HKIHRM data, the majority of companies in Hong Kong offered a pay increase this year, with only 8.3% opting for a pay freeze.
Large-sized companies with more than 1,000 employees reported the biggest pay adjustment for employees with 3.2%. This is followed by small-sized companies (3.1%) and medium-sized firms (3.0%).
Local companies in Hong Kong also implemented a higher increase of 3.4% this year compared with the 2.6% increase from multinational companies.
Lawrence Hung, president of HKIHRM, said the higher increase from local companies can be attributed to these organisations' needs to attract and retain talent.
"In contrast, multinational companies must take into account global market pay standards and regional economic conditions, resulting in the adoption of distinct pay adjustment strategies," Hung said in a statement.
By employee level, middle-level employees saw the biggest salary adjustment at 3.7%, followed by senior-level employees at 3.6%.
Hung attributed the higher increase for middle- and senior-level employees to the talent gap in Hong Kong.
"As Hong Kong's population ages rapidly, the talent gap at middle and senior positions is becoming more pronounced, necessitating employers to raise salaries to secure and retain mid-level and senior talent to meet future operational requirements," the HKIHRM president said.
Company performance was the top factor for pay adjustment decisions in 2024, as cited by 82% of the respondents. The other factors are:
- Individual performance (59%)
- Market/Competitors' Pay Adjustments (29%)
GBA salary adjustment
Meanwhile, 61.2% of GBA employers offered a pay increase in 2024, while 17.9% decided to freeze pay.
Promoted employees in the GBA also received a massive pay adjustment of 10%, while core or high-performing employees received an increase of 8.5%. By occupation, R&D/technical staff received the highest pay adjustment at seven per cent, followed by sales staff with 5.5%.
Pay predictions moving forward
In the coming year, 63% of Hong Kong employers are forecasting a pay increase for next year, while only three per cent are anticipating a pay freeze. Among those predicting an increase, they estimated the pay adjustment to be 3.6% or above.
In the GBA, 31.3% of organisations are expecting a pay rise next year, while 12.9% are anticipating a pay freeze. Organisations that predict a pay hike said it would likely be 4.7% or above, according to the report.
Hung said the global economic uncertainty has a role in companies' considerations in forecasting pay adjustments.
"Despite some relief from interest rate cuts, companies maintain a delicate balance between managing human resource expenses and staying competitive in the market. As a result, a more cautious approach towards business expansion and pay adjustment is anticipated," he said.
"However, we are optimistic that Hong Kong companies will proactively venture into international markets with government support for various economic initiatives, thereby boosting competitiveness to tackle future challenges."