Base Pay Increases by 4.2% in 2011

(Tuesday, November 01, 2011)

Base Pay Increases by 4.2% in 2011

Pay adjustment forecast for 2012 remains positive

 

 

[1 Nov 2011 - Hong Kong]    The average base pay adjustment continued to rise despite a falling sentiment on economic development recently while pay adjustment projected for 2012 still recorded an upward trend. These were revealed in the results of the 2011 Pay Trend Survey conducted by the Hong Kong Institute of Human Resource Management (HKIHRM), which has been tracking pay adjustment in Hong Kong for more than two decades. 

 

The survey covers a total of 103 companies from 17 different industrial or business sectors, with a total of some 146,000 full-time salaried employees. Key findings of the survey are as follows:

 

Base Pay Adjustment in 2011

A total of 98 companies from 17 sectors, employing 131,406 employees and making base pay adjustment between 1 January to 1 October 2011, confirmed their pay adjustment during the survey period (January to October) and provided relevant base pay adjustment data for the survey.

 

The overall average base pay adjustment recorded for the 98 companies was 4.2% (weighted average), 2.3 percentage points higher than the figure recorded for the same period last year (1.9%). All companies offered a base pay increase as compared to 95.3% in the same period in 2010.

 

By business sector (of those that provided sufficient data for analysis), companies from the financial services sector offered the highest pay increase (5.8%), followed by the banking and construction sectors (both at 5.2%).

 

In terms of employee numbers, 88.6% of employees received a base pay increase while 11.4% of employees had no pay adjustment. One employee received a pay cut.

 

“An overall upward base pay adjustment in 2011 can be explained by strong economic momentum and a buoyant job market in the first half of 2011. We saw rise in base pay by all surveyed companies. This fully reflects the active labour market in the early period of the year,” said Mr Lawrence Hung, Chairperson of the Remuneration Committee of the HKIHRM.

 

Bonus Payment for 2011

Of the 99 companies providing data on bonus payment, 48 companies reported that they had a guaranteed-bonus plan, indicating that 36.5% of the total surveyed employees are eligible for a guaranteed bonus. Among those employees awarded a bonus, the overall average bonus size was 1 month of base pay.

 

Data collected in the past ten years illustrate a decreasing trend in both the number of companies maintaining a guaranteed-bonus plan (from 80.8% in 2002 to 46.6% in 2011) and the proportion of employees eligible for a guaranteed bonus (67.3% in 2002 to 36.5% in 2011).

 

Meanwhile, a total of 99 companies reported that they provided a non-guaranteed bonus planwith 87 companies providing data on the size of bonus payment in 2011. Of their eligible employees, 84.8% were awarded a non-guaranteed bonus, with the average bonus size being1.43 months of base pay. This compares with 79.6% of eligible employees actually awarded a non-guaranteed bonus of 1.21 months of pay last year.

 

“An increasing number of companies with a non-guaranteed bonus plan and more employees covered by such plan have become a prevailing trend in the last decade. Against a backdrop of economic uncertainty, a performance-based reward system provides employers with greater flexibility when incentives will be offered based on individual performance and corporate results,” remarked Mr Hung.

 

2012 Base Pay Adjustment Forecast

87 participating companies will have base pay adjustment in the period from January to April. Among them, 54 companies indicated that they had already confirmed their budgeted adjustment and provided data.

 

Of these 54 companies, 98.1% indicated that they would have an overall budgeted pay increase. The overall forecast adjustment by all these companies is 5% (weighted average). Meanwhile, 1.9% anticipated no pay adjustment while no company projected a pay reduction.

 

 

Conclusion

“Concerns about the Eurozone debt crisis and the subdued economic growth in the United States are making employers more cautious on budget control. Our survey revealed a positive base pay adjustment forecast for 2012. Still, many employers may adopt a more prudent wait-and-see approach in pay review next year to ensure business sustainability. Under all circumstances, the decision on pay adjustment for any individual company boils down to the consideration of how its pay is linked to the company and individual’s performance, its pay philosophy, current pay level of its staff against market benchmark, pay review system, and affordability to pay,” concluded Mr Hung.

 

 

 

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About HKIHRM

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 http://www.hkihrm.org.

 

 

 

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