Hong Kong firms with smaller salary budgets double amid inflation, economic woes: study

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The average worker can expect a 4 per cent pay hike next year, while data science and business intelligence professionals could see a raise of up to 8.3 per cent: WTW study

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Hong Kong firms have seen their salary budgets shrink as voluntary staff exit remains high in the city, compared with other Asian markets. Photo: Xiaomei Chen

Cheryl Arcibal

Published: 5:28pm, 29 Aug 2024Updated: 5:49pm, 29 Aug 2024

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).

Nearly 40 per cent of Hong Kong companies have a smaller payroll budget for the current financial year ending March than they did last year, compared with 21 per cent a year ago, and the outlook for next year is equally conservative, the firm said in the report on Thursday.

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.