Positive sentiment in Hong Kong's economic development gave rise to a continuous upward trend in base pay adjustment in the first four months of 2011, according to the results of the Hong Kong Institute of Human Resource Management (HKIHRM) April 2011 Hong Kong Pay Trend Survey.

A total of 68 companies from 14 sectors, employing 79,465 employees and making base pay adjustment between Januart and April 2011, confirmed their pay adjustment during the survey period (Jan and Apr) and provided relevant base pay adjustment data for the survey.

The overall average base pay adjustment recorded for the 68 companies was 3.7% (weighted average), 1.9 percentage points higher than the figure recorded for the same period last year (1.8%). All of them offered an overall pay increase.

By business sector (of those that provided sufficient data for analysis), companies from the financial services sector (7.5%) offered higher pay increase, followed by banking (5.4%) and construction (5.2%) sectors. No business sector recorded an overall pay freeze or reduction in this period.

All companies surveyed offered a base pay increase as compared to 95.2% in the same period 2010. No pay cut has been recorded for eight consecutive years.

In terms of employee numbers, there was a further increase this year in the percentage of employees getting a positive adjustment in base pay. No employees faced a pay cut.

The survey results revealed that base pay adjustment continued with an upward trend under the backdrop of a flourishing economy in the first four months of this year.

“Data shows that with a vibrant labour market, employers had to offer more attractive pay to remain competitive in the relevant labour market," says Lawrence Hung, Chairperson of the Remuneration Committee of the HKIHRM. "This was particularly true for some sectors which experienced faster expansion, where better pay increments had to be offered to retain high-quality talents.”

Of the 90 companies providing data on bonus payments, 41 companies reported that they have a guaranteed-bonus policy, no company made changes to this policy in 2011. All these 41 companies awarded a guaranteed bonus to their employees, with the average bonus size being 1.01 months of base pay.

On the other hand, a total of 62 companies with a non-guaranteed bonus scheme confirmed a bonus payment during the survey period. Of their eligible employees, 97.4% were awarded a non-guaranteed bonus, with the average bonus size being 1.46 months of base pay. This compared with the 94.5% of eligible employees actually awarded a bonus of 1.27 months of pay in the same period last year.

Hung notes that more companies choose to offer non-guaranteed instead of guaranteed bonus as an important component of a flexible and fair incentive system. In the private sector, base pay adjustment and bonus incentive are more increasingly based on corporate results, individual work performance and market benchmark, while inflation is not the primary factor.