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Hong Kong employers at large tend to remain cautious in respect to pay adjustment decision amid a possible global economic slowdown. The average base pay adjustment forecast dropped to 4.7%, slightly lower than the 5% projection captured in October 2011.

The findings were revealed in the results of the HKIHRM 2011 Pay Trend Survey - Follow-up Survey on 2012 Forecasted Base Pay Adjustment conducted by the Hong Kong Institute of Human Resource Management (HKIHRM). The survey covers a total of 66 companies from 17 different industry or business sectors.

Among the 66 surveyed companies, 40 of them, employing 29,613 employees, will have their base pay adjustment during the period January to April. They indicated their pay adjustment forecast during the survey period (January) and provided relevant base pay adjustment data.

Among these 40 companies, 95% (38 companies) forecasted an overall budgeted pay increase. The forecasted average base pay adjustment by all these companies is 4.7% (weighted average), 0.3 percentage points lower than the forecast of 5% captured in October 2011. (Chart 1) Meanwhile, 5% (two companies) anticipated no pay adjustment while no company projected a pay reduction.

By business sector (of those that provided sufficient data for analysis), companies projecting relatively higher pay increases are found in the non-governmental organisation sector (7.1%), followed by construction (5.7%) and shipping/terminals (5.5%) sectors.

In terms of employee numbers, 98.6% of employees may expect to receive a base pay increase while 1.4% of employees a zero pay adjustment, and none will have a pay reduction.

“These findings are consistent with the base pay adjustment forecast the Institute released in November 2011. Despite the prevailing uncertainties in the global economy, a forecast on base pay increase was still recorded across most industry sectors. In some sectors which experienced faster expansion or were in urgent need of talents, more attractive pay rises would be offered as a basic measure on staff retention,” comments Lawrence Hung, Chairperson of the Remuneration Committee of the HKIHRM.

Comparison

Forty-five participating companies responded to the question on whether they had revised their base pay  adjustment forecast in 2012. Nearly half of the respondents (44.4%) kept their original forecast. Some 20% raised their forecast while another 20% lowered their forecast.

The top three reasons for making a change in the base pay adjustment forecast are market pay adjustments (52.6%), worldwide economic downturn (42.1%), and uncertainties and risks in the business environment (36.8%).

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