Hong Kong’s Average Pay Rise for 2017 Projected at 3.5%

In a slowing economy and a challenging business environment, it is projected that Hong Kong employees may expect to receive a base pay adjustment of 3.5% on average in 2017, according to the 2016 Pay Trend Survey findings revealed by the Hong Kong Institute of Human Resource Management (HKIHRM).

Eighty-eight out of the 89 participating companies confirmed their pay adjustment during the survey period and provided data for analysis.

Based on the data provided by the 88 responding companies, the overall base pay adjustment in 2016 was 3.5% (weighted average), close to the overall average base pay adjustment projected in November 2015 at 3.8%.  Of the 88 surveyed companies, 98.9% offered a pay rise in 2016, 1.1% reported to have pay freeze, but no companies implemented a pay cut.

The top three business sectors that offered the highest pay adjustment included construction (4.7%), NGO (4.7%) and public utilities (4.1%).

In terms of pay adjustment according to company size, there was an overall downward trend of pay rise for all sizes of companies in 2016 from a year earlier. In 2016, small companies (under 500 staff) offered the highest pay base increase of 4.2%, higher than that of 3.7% and 3.5% recorded for medium-sized companies (between 500 and 1,000 staff) and large companies (more than 1,000 staff) respectively.

Guaranteed bonus

Eighty-nine companies provided data on bonus payment in 2016. Among them, 38 companies (42.7%) reported that they had a guaranteed bonus policy.

Data reveals that the proportion of employers implementing a guaranteed bonus policy has been on a decline over the past few years. Among all the surveyed employees, 37.4% of them were eligible for a guaranteed bonus, a slip of 3.4 percentage points from last year.

Among those employees being awarded a bonus, the average size of guaranteed bonus was 1.02 months of base pay, which indicated the size of bonus has remained at a stable level over the past several years.

Non-guaranteed bonus

Eighty-two companies (92.1%) out of the 89 responding companies confirmed they had a non-guaranteed bonus plan during the survey period.

Among all the surveyed employees, 79.5% were covered by a non-guaranteed bonus plan.  For employees who were awarded this incentive, the average size of a non-guaranteed bonus was 1.41 months of base pay.

Business sectors which offered the third highest non-guaranteed bonus amounts included financial services (5.77 months of base pay), shipping/terminals (1.85 months of base pay) and hotels (1.63 months of base pay).

Projected Base Pay Adjustment in 2017 

The report also revealed that 63.6% of the responding companies indicated that would raise employees’ base pay while 2.3% would implement pay freeze. The remaining 34.1% did not provide pay adjustment forecast for 2017. Among those companies that provided data on 2017 base pay adjustment projection for the period from Jan to Apr 2017, the average pay rise for 2017 would be 3.5% (weighted average).

According to the survey findings, top five factors that will affect employers’ decisions on pay adjustment include company performance, individual performance, market pay adjustments, business unit performance and inflation.

“In view of Hong Kong’s slowing economy and challenging business environment, Hong Kong employers reduced the pay rise level and the amount of non-guaranteed bonus in 2016,” says Lawrence Hung, Vice President of the HKIHRM.

According to the survey findings, the proportion of employers implementing a guaranteed bonus policy has been on a decline over the past few years. The average pay rise of 3.5% projected for 2017 reveals Hong Kong employers’ prudent approach to pay adjustment amid economic uncertainties and reflects Hong Kong’s realistic market situation. 

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