Business performance, pay adjustments offered by competitors/other companies in the market, and employees’ individual performance are three major factors that companies took into account in pay adjustment.
Hong Kong is undeniably facing talent outflow and high staff turnover. Therefore, offering more attractive and generous pay and benefit packages has become an effective way for employers to acquire and retain suitable talents.
A recent survey by the Hong Kong Institute of Human Resource Management (HKIHRM) found that Hong Kong employees received an average salary increase of 3.5% in 2022, hitting the highest level since the COVID-19 outbreak.
The majority (96%) of participating companies offered a pay increase, the base pay adjustment for 2022 was 3.5% (weighted average). After deducting the 1.9% rise in the Composite Consumer Price Index from January to August 2022, the real base pay adjustment stood at 1.6%. Meanwhile, 4% froze their employees’ pay.
Small-sized companies (those with fewer than 500 employees) provided the biggest pay rise at an average of 3.9%, while large-sized companies (with more than 1,000 employees) offered the smallest pay rise at 3.4%. Of medium-sized companies (with an employee size between 500 and 1,000), staff pay increased by 3.6% on average.
In terms of employee level, senior-level staff received the largest pay adjustment at 3.8%, while top-level staff were slightly behind at 3.7%.
Among the 117 companies which provided projection data for 2023, more than two-thirds (68%) forecast a pay rise next year, while 12% expected staff pay to freeze. The remaining 20% had yet to conduct a forecast.
For pay increases in 2023, the average projected pay adjustment was listed as upwards of 3.6% by the participating companies.
Regarding the major factors that companies took into account in pay adjustment, business performance continued to remain at the top of the list. Compared with 2021, “pay adjustments offered by competitors/other companies in the market” moved up one place to rank second, whereas “employees’ individual performance” stayed at the third place.
As for bonus payments, 42.8% of participating companies indicated they had guaranteed bonus schemes for staff. The average size of guaranteed bonus was 1.09 months of base pay – slightly above the level of 1.01 months in previous years.
On the other hand, over nine in ten (92.9%) reported that they offered a non-guaranteed bonus to their employees, of which 71% were eligible for a non-guaranteed bonus plan, and the average size of the bonus was 1.57 months of base pay.
In terms of employee level, the average size of non-guaranteed bonus received by top-level staff was 3.29 months of base pay, which exceeded the average amounts of senior-level, middle-level, and general staff at 2.37, 1.71, and 1.32 months of base pay, respectively.
Lawrence Hung, President of the Hong Kong Institute of Human Resource Management, noted that the average increase in employee pay this year to some extent reflects business sentiment has started to improve. He also expected the uptrend in staff pay to continue next year.
Apart from remuneration, he added that when selecting jobs employees are increasingly concerned with work-life balance, family-friendly workplace policies and the company’s commitment to social responsibility.
"HR professionals can play a leading role in pushing organisations to focus more on these aspects in formulating their recruitment strategies,” he said.
HKIHRM’s 2022 Pay Trend Survey collected data from 178 companies on pay adjustment and bonus incentives provided for employees in the period between January and September this year. The companies that participated in the survey spanned 12 business sectors, employing a total of around 120,700 full-time salaried employees.
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