One-Third of Hong Kong Employers Report Lower Salary Budgets

Research from WTW finds that most organisations in the APAC region have been more conservative with budgets this year.

By Maggie Mancini

Despite the economy rebounding, over one-third of organisations (37.7%) in Hong Kong report that their salary budgets for the 2024 cycle are lower than the previous year, as the overall average pay rise for 2024 remains the same at 4% when compared to last year. That’s according to the latest Salary Budget Planning Report by WTW.  

As employees 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 leading causes. Overall salary budget increases are expected to remain at 4% in 2025 in Hong Kong.  

Considering these issues, 34.1% of companies have made changes and lowered their budget for the current cycle from prior budgeted projections for salary increase while 41.1% had their budget remains constant. Additionally, organisations are taking actions to address current market conditions and employee needs, particularly improving the employee experience, placing broader emphasis on DEI, 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 like 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 labour shortages in the workforce. At the same time, 13.5% of companies plan to increase headcount in the next year, driven by resumption of recruitment activities across industries. Only 5.4% intend to reduce headcount, while 81.1% aim to maintain their current recruitment strategy.  

In other APAC markets, similar pay trends have been observed. Economic and financial concerns are causing organisations to 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 and Southeast Asia observe relatively stable salary increase rates.