Despite the economy rebounding, over one-third of organisations (37.7%) in Hong Kong reported that their salary budgets for the 2024 cycle were lower than the previous year, as the overall average pay rise for 2024 remains the same at 4% as compared to last year. That’s according to the latest Salary Budget Planning Report by WTW, a leading global advisory, broking, and solutions company.
As employers report that a period of high resignation and turnover has passed and organisations maintain headcount, employers are more conservative with their salary budgets as they look to longer-term stability in their employee base. Those organisations that lowered salary budgets cited inflationary pressures, concerns related to cost management and weaker financial results as the leading causes. Overall salary budget increases are expected to remain at 4% in 2025 in Hong Kong.
In light of these issues, 34.1% of companies have made changes and lowered their budget for the current cycle from prior budgeted projections for salary increases while 41.1% had their budget remain constant. Additionally, organisations are taking actions to address current market conditions and employee needs, particularly improving the employee experience, placing broader emphasis on diversity, equity and inclusion, and increasing training opportunities.
Overall, the average voluntary staff attrition rate in Hong Kong remains high at 14.1% in the last 12 months as compared to other North Asian markets such as China (8.7%), Japan (7.9%), South Korea (9.7%) and Taiwan (11%). This is due to the continual emigration trend out of the city, leading to a shortage of labour in the workforce. At the same time, 13.5% of companies plan to increase headcount in the next 12 months, driven by the resumption of recruitment activities across industries. Only 5.4% intend to reduce headcount, while 81.1% aim to maintain their current recruitment strategy.
APAC salary budget increase rates are expected to remain relatively stable in 2024 and 2025 in most markets In other Asia Pacific (APAC) markets, similar pay trends are observed. Economic and financial concerns are causing organisations to revisit and revise their approach to their salary budget strategies. Nevertheless, markets such as India, Vietnam and Indonesia maintain the highest salary increase rate in the region at 9.5%, 7.5% and 6.4% respectively this year. Other markets in North Asia and Southeast Asia observe relatively stable salary increase rates. The salary budget increase in APAC has decreased from 5.9% in 2023 to 5.7% this year and is projected to be at 5.8% in 2025.
“Looking ahead, most markets anticipate higher GDP growth rates in 2024, fostering a positive economic outlook. As a result, organisations are expecting stable or increased salary increase rates next year. However, we are also seeing variations across markets with shifting priorities by companies affecting salary budgets,” said Edward Hsu, Rewards Data Intelligence Leader, International and Asia Pacific, WTW.
In Hong Kong, salaries for roles in data science and business intelligence have surged by 8.3%, indicating a strong demand for critical talent. Competition for talent has also been evident in the field of human resources, particularly for key roles in the environment, social and governance, employee well-being and productivity. The demand for digital talent also remains robust in Singapore as the fintech and digital payment industries continue to offer a 39% premium to attract key talent. Furthermore, traditional manufacturing companies in Singapore are upskilling their workforce to integrate automation into their operations.
“Digitalisation also has an effect on compensation, with tech roles such as those in AI, and machine learning, seeing double-digit salary growth in many markets. The transformation potential of AI has made it the most sought-after technology discipline in the global talent market. As such, organisations around the world are willing to invest heavily in skilled professionals who can drive innovation and growth in the AI space, giving companies the upper hand in today’s competitive business environment,” adds Edward.
“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.”
