Amid general concern about possible economic fluctuations, the average base pay adjustment in the first four months of 2013 remained steady at 4.5%, according to the results of the April 2013 Pay Trend Survey conducted by the Hong Kong Institute of Human Resource Management (HKIHRM).
Among all the surveyed companies, 50 of them, covering 12 sectors and 58,211 employees, made base pay adjustment between Jan and Apr 2013, confirmed their pay adjustment during the survey period (January and April) and provided relevant base pay adjustment data for the survey.
The overall average base pay adjustment recorded for the 50 companies was 4.5% (weighted average), 0.7 percentage point higher than the figure recorded for the same period last year (3.8%) and close to the forecast adjustments of 4.6% and 4.4% announced by the HKIHRM in November 2012 and March 2013 respectively.
Nearly all (98%) of companies surveyed offered an overall base pay increase as compared to 97% in the same period in 2012. One surveyed company recorded an overall zero base pay adjustment. No overall negative base pay adjustment was recorded.
The top three sectors which offered the highest overall base pay increase are: retail (6.9%), construction (6.2%) and insurance (5.0%).
Of the 58,211 employees concerned, 85.7% received a positive adjustment in base pay, 14.3% received zero adjustment while no employee faced a negative adjustment.
“Our latest survey findings showed that the actual average base pay adjustment in the first four months of this year was in line with our previous pay forecasts for 2013,” comments Francis Mok, President of the HKIHRM.
Although employers were alert to possible economic fluctuations as a result of changes in the financial policies of countries like the US, the Mainland and Japan, they also noticed that the local economy still performed well in the first quarter of 2013.
Gross domestic product grew by 2.8% year-on-year in real term, compared to 1.5% in the whole year of 2012. Total exports of goods and services recorded solid growth rates at 8.8% and 4.9% year-on-year in real term respectively. Besides, the unemployment rate remained low at around 3.5%. That may explain why a steady growth in pay was recorded in the survey period.”
Of the 86 companies data provided data on bonus payment, 41 companies reported that they had a guaranteed-bonus policy. They awarded a guaranteed bonus to their employees, with the average bonus size being 0.99 month of base pay as compared to 1.01 months of base pay recorded in the same period last year.
Of the 86 companies, 48 companies with a non-guaranteed bonus scheme confirmed their bonus payment during the survey period. Of their eligible employees, 97.7% (51,780 employees) were awarded a non-guaranteed bonus, with the average bonus size being 1.61 months of base pay. This compared with 97.7% of eligible employees actually awarded a bonus of 1.66 months of base pay on average in the same period last year.
The top three sectors which offered the highest non-guaranteed bonus are: hotel (2.42 months of base pay), shipping/terminals (2.4 months of base pay) and banking (2.24 months of base pay).
“Discretionary bonus has become a useful tool to retain and motivate valuable staff at a time when both economic uncertainty and labour shortage co-exist, offering a certain degree of flexibility. However, we would reiterate that apart from financial variables, more refined non-financial rewards must be in place side by side to retain talent, such as career development opportunities, family-friendly practices, work-life balance options and greater employee engagement in certain decision-making processes,” remarks Mok.
Labour Market Outlook
Among the 77 companies which provided data and expressed an opinion, 51.8% anticipated a substantial or moderate growth in demand in the labour market, with such anticipation being more prevalent in the financial services, property development/management, manufacturing, and hotel sectors.
“In the current economic climate, the job market is expected to remain buoyant in the near term. Employers of more flourishing sectors may experience great challenges in staff recruitment and retention. All in all, designing a competitive, effective and flexible pay system will continue to be a big test for employers and HR professionals," concludes Mok.