According to the most recent Mercer poll, salaries in Hong Kong SAR will continue to climb in 2023, although businesses are cautiously optimistic.
While still below pre-pandemic levels overall, predicted median pay increases for next year are 3.8%, up from 3.6% this year. The most significant issue for businesses is attracting and retaining talent since voluntary turnover in 2022 might potentially quadruple pre-pandemic levels. And according to Mercer’s annual Total Remuneration Survey (TRS) 2022, Hong Kong Special Administrative Region employees may anticipate a median 3.8% rise in their pay in 2019. Between April and June of this year, the TRS surveyed 544 firms in Hong Kong from 13 different industries.
As per Mercer’s annual Total Remuneration Survey (TRS) 2022, Hong Kong Special Administrative Region employees may anticipate a median 3.8% rise in their pay in 2019. Between April and June of this year, the TRS surveyed 544 firms in Hong Kong from 13 different industries. Salary increases have been climbing gradually since the pandemic’s peak in 2021, but they haven’t yet reached the pre-pandemic level of 4% observed in 2019. The median income increase in Hong Kong SAR is less than the Asia Pacific average1 of 4.4%. With estimates ranging from 7.1% in Vietnam to 2.2% in Japan, the total median wage increases across the Asia Pacific demonstrate a difference in pay progression across developing and industrialized nations.
“Hong Kong SAR’s progressive re-opening of its borders and strong will to ramp up its economic operations have led to a more positive view for businesses,” said Gary Chin, Head of Rewards for Hong Kong SAR, Mercer. However, the economy has also been impacted by rising international interest rates and decreased commerce with Mainland China as a result of restricted borders, which has tempered the growth prediction for 2023. As evidenced by their compensation estimates, employers in Hong Kong SAR continue to be cautiously optimistic about the coming year’s performance.
In comparison to other businesses, the Banking and Financial Services sector is anticipated to have the biggest compensation growth, at 4.5%. It is also seeing the largest increase from 4% in 2022, comparable to the 3.5% improvement in the Energy and Services (non-financial) sectors from this year to the forecast 4% increase in 2023. A number of other important sectors, including High Tech (4%), Life Sciences (4%), Logistics (3.6%), and Consumer Goods (3.8%), are either holding steady or seeing minor growth.
With regard to wage trends in the industry, Mr. Chin stated: “The Banking and Financial Services industry is recovering well due to Hong Kong SAR’s strong standing as a financial hub for the region, and efforts by the Government to encourage enterprises to set up operations in the city and to invest in their businesses. Since the epidemic hit, the high-tech and life sciences industries, for instance, have kept up their speed and are gaining from a favourable business climate and market demand. On the other hand, sectors like consumer goods and logistics have been severely damaged recently and will take some time to recover.
But…the greatest problem still lies in attracting and keeping talent.
Companies in Hong Kong continue to place a strong focus on attracting and keeping talent as they struggle with higher-than-average voluntary turnover this year. By the middle of 2022, the average turnover rate was already 10.5%. Comparatively, in Hong Kong, businesses saw a full-year voluntary turnover rate of 14.6% in 2019. The current pandemic limitations and a more difficult business climate, which has caused a talent exodus, are the main causes of the high turnover. The population of Hong Kong SAR decreased by 1.6% between mid-2021 and mid-2022 as a consequence of a 113,200 resident exodus, according to the Census and Statistics Department. The population has decreased at its greatest rate ever. The difficulty is more obvious in other sectors, including hospitality and retail, which are still negatively impacted by the absence of visitors from Mainland China. Moreover, many workers’ current expectations of having more flexible work arrangements are not met by the nature of the employment in these industries.
Higher changeable incentives are one strategy used by businesses to draw and keep talent. In comparison to pre-pandemic levels, bonus payments for senior executives (24%), management (25% for sales and 16.9% for non-sales), and sales professionals (28%) have all grown and surpassed. Payouts for paraprofessionals (10%) and non-sales professionals (10%) have mainly remained the same.
Companies in Hong Kong continue to be conservative in their employment practices and are maintaining the status quo. With 15.5% planning to increase personnel, more than half of organizations plan to maintain their current workforce in 2023. Only 1.5% want to lay off employees. Businesses are mostly concentrating their efforts on maximizing and equipping their current staff, with recruitment efforts going toward important talent or filling open positions.