Wages in Hong Kong are increasing above historic levels as employers compete for highly-skilled professionals, according to the 2014 Hays Global Skills Index which gave the city a score of 10.0, the highest possible.
The Hays Global Skills Index, produced in collaboration with Oxford Economics, ranks Hong Kong 5th on the list of 31 countries overall for efficiency of the skilled labour market (behind Belgium, Italy, Singapore and Denmark). But a deeper dive into the findings shows that Hong Kong’s employers face a tight labour market, particularly for highly-skilled professionals.
Seven indicators make up the Hays Global Skills Index and each received a score out of 10. Of particular note for Hong Kong is the score of 10.0 for overall wage pressure, which shows that real wages in Hong Kong are increasing much quicker than the longer term trend. No other country received the top score of 10.0 for overall wage pressure.
According to recruiting experts Hays, this indicates Hong Kong is on the verge of an exceedingly tight labour market.
“The shortage of talent and Hong Kong’s high cost of living has seen employers offer competitive wages to secure and retain highly-skilled professionals,” says Dean Stallard, Regional Director of Hays in Hong Kong.
“In fact, wages are increasing much quicker than we have historically seen. This tells us that overall the labour market is tight as employers compete for talent based on salary. It also shows that further salary increases will likely do little to alleviate the shortage of highly-skilled candidates.”
Hong Kong’s economy is growing at below the long-term average, but the strong demand for labour has seen wage growth of 5 per cent annually.
Yet while Hong Kong received the highest possible score for overall wage pressure, it received almost the lowest possible – 0.3 – for wage pressure in high-skill occupations. This suggests that wages are rising at next to the same rate for both those in high-skill occupations (such as managers, senior officials or skilled trades) and those in low-skill occupations (such as process, plant and machines operatives, and administration workers).
Also of interest is the indicator for labour market participation, for which Hong Kong received a moderately high score of 6.8. “This shows that the proportion of working age people isn’t increasing, and so there are no additional resources to meet demand,” said Dean.
Meanwhile a low score for education flexibility (1.7) indicates Hong Kong’s education system is fairly well-equipped to meet labour market needs.
Only China (1.3), India (0.3) and Singapore (0.8) scored lower, while Japan’s score was 2.8. This makes Asia’s educational performance the best in the Hays Global Skills Index.
Hong Kong’s overall score rose from 4.1 in 2013 to 4.5 in 2014, further demonstrating that employers face more competition for key talent.
“As a result, candidates with in-demand skills can be confident of securing their next career move,” said Dean. “But for employers, there is a need to look at more innovative strategies to attract and retain top talent.”