Pay Rise Rebounded with Improved Economy

(Thursday, November 04, 2010)


Pay Rise Rebounded with Improved Economy

Companies are prepared to offer higher pay adjustment

against the backdrop of a positive economic outlook for next year



[4 November 2010 – Hong Kong]   Almost two years after the meltdown on Wall Street in September 2008, Hong Kong has experienced moderate economic recovery, witnessed by a reduced unemployment rate and a more vibrant labour market. Meanwhile, anticipating a positive economic outlook, companies are prepared to offer higher pay adjustment in general for next year, according to the 2010 Pay Trend Survey conducted by the Hong Kong Institute of Human Resource Management (HKIHRM), Hong Kong’s largest professional human resource association.


Having tracked over 100 renowned companies from various industry sectors covering over 110,000 employees for more than 20 years, the Institute continues to deliver the most comprehensive data on trends in annual pay adjustments in Hong Kong for the reference of its members and the community at large.


Base Pay Adjustments

Between January and October 2010, a total of 97 companies (employing some 139,000 full-time salaried staff) from 17 different industrial or business sectors participated in the 2010Pay Trend Survey. Of these, 86 companies provided data on pay adjustments. The results revealed an average base-pay increase of 1.9% in 2010, 1.3 percentage points higher than the average adjustment of 0.6% in 2009.


This year, 95.3% of companies reported a pay increase while 4.7% made an overall zero adjustment. No company opted for an overall pay reduction. In general, companies employing between 500 and 1,000 staff offered a relatively higher pay increase (2.4%).


In terms of employee numbers, 73% of employees covered by the survey received a pay rise. No employees suffered a pay reduction. Those at the middle level received the highest pay rise (2.2%).


This year, the highest overall increase was found in the Construction sector at 3.1%,followed by the Banking and the Insurance sectors, where adjustments of 2.9% and 2.6% were recorded respectively.


Mr Lai Kam-tong, Co-chairman of the Remuneration Committee of the HKIHRM, said, “We are glad to see that many companies are willing to share the fruits of good business results with their employees. In 2010, pay increase was a prevailing trend against a backdrop of economic recovery and a declining unemployment rate. The average base-pay percentage increase had solidly rebounded when compared with last year. Afterexperiencing a period of business uncertainty in 2009, cost control was still a vital challenge among companies in 2010. Pay strategy continued to focus on rewarding those employees delivering outstanding performance.”


In order to capture the most up-to-date pay-adjustment forecasts for next year, theHKIHRM also collected relevant data this October. Of the 86 surveyed companies normally holding their pay review during January and April, 45 companies have provided their budgeted data with 95.5% (43 companies) forecasting an overall budgeted pay increase.Two companies forecast a pay freeze. The overall average adjustment budgeted by all these companies is 3.3%.


“While Hong Kong is now back on the growth track, the economic recovery comes together with higher consumer prices, fuelled by yuan appreciation, US dollar depreciation and low interest policy adopted by the US. A vibrant economy accompanied by higher inflation is not new to Hong Kong and naturally leads to higher pressure and expectation in general for salary increase. Having said that, the decision on pay adjustment for any individual company all boils down to the considerations of its pay philosophy, current pay level of its staff against market benchmark, pay review system, affordability to pay and how its pay is linked to the company and individual’s performances,” said Mr Lai.


Meanwhile, the 2010 Pay Trend Survey continues to track bonuses, including both guaranteed and non-guaranteed bonuses. Of the 45 companies (out of 97 companies surveyed) that provide a guaranteed bonus plan, 36.9% of total employees surveyed are entitled to a bonus this year. One company normally having a guaranteed-bonus policy made a change to incorporate the guaranteed pay into the base pay. Data collected since 2001 confirm a decreasing trend in both the number of companies maintaining a guaranteed-bonus plan (from 89.7% in 2001 to 46.4% in 2010) and the proportion of employees eligible for a guaranteed bonus (73.1% in 2001 to 36.9% in 2010).


At the same time, 93 (95.9%) of the 97 companies surveyed did provide a non-guaranteed bonus plan to some or all of their employees in 2010, with 79.6% of eligible employees actually being awarded a bonus. The average 2010 non-guaranteed bonus for eligible staff was 1.21 months of pay, slightly higher than the 1.09 months recorded last year. The bonuses awarded to all levels of employee ranged from 1.06 to 4.46 months’ pay.


“We are all aware that business cycles nowadays are getting shorter and more chaotic. While we experience an economic recovery, we are also reminded of all kinds of risks such as the imminent bursting of property bubble.  In short, business environment remains turbulent. A flexible and sustainable remuneration structure based on the pay-for-performance principle is always valid. To award performing staff with variable bonus following fair and transparent principles and policies should be more widely used by companies in Hong Kong,” said Mr Lawrence Hung Yu-yun, another Co-chairman of the Institute’s Remuneration Committee.



The economic outlook for 2011 is positive in general but some new developments in the employment market will trigger challenges to HR professionals, among which is the implementation of a minimum wage for the first time in the history of Hong Kong.


One of the new developments in shaping the pay level is the passing of the Minimum Wage Bill by the Legislative Council in July this year. From now on, apart from market forces of supply and demand, the pay level in Hong Kong will also be decided by law at least for some job types. While it is hoped that a minimum wage would forestall the payment of excessively low wages to employees, care has to be taken to avoid an excessive shrinking of the employment market, especially for those who are less competitive in terms of skills,” concluded Mr Lai.




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As the most representative professional human resource institute in Hong Kong, the Hong Kong Institute of Human Resource Management (HKIHRM), a non-profit making organisation, has over 4,900 individual and corporate members. Founded in February 1977, the Institute aims at developing, maintaining and enhancing professional standards in HR management, and increasing the perceived value and influence of the HR profession. The Institute organises a wide range of professional activities such as multi-level training programmes and conferences, and provides services such as conducting surveys and publishing a professional journal. The HKIHRM is a member of the Asia Pacific Federation of Human Resource Management which is one of the continental federations under the World Federation of People Management Associations. For more information, please visit our website at





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