Hong Kong, 18 January 2021 – Hong Kong employees are likely to see modest increases in their salaries as employers plan prudently amid the uncertain economic environment, according to the Mercer’s annual Hong Kong Total Remuneration Survey (TRS) 2020, conducted between April and June last year.
Additional surveys were conducted in July and August in light of the fast-changing market environment. 536 mid- to large-sized companies across 14 industries participated in Mercer’s Hong Kong survey.
Excluding companies that have implemented wage freezes, businesses in Hong Kong initially forecasted an average 3.6% overall merit increase in salaries for 2021; but further surveys reflect a likely lowering of increments between 3% and 3.5% -- a dip from 4% in past years. Management staff will be hardest hit with a projected median pay rise of 2.4%.
As of August 2020, close to 60% of companies said they were uncertain about their salary increment budget for 2021, with 23% expecting their salary increment budgets to shrink. 15% to 20% of companies are expected to implement or continue salary freezes, with 6% planning a temporary salary reduction.
Hiring is also anticipated to slow this year. 82% of companies in Hong Kong indicated that they intend to maintain their headcount in 2021, hiring only for replacements, while 16.1% of companies surveyed plan to reduce headcount.
As organisations continue to navigate the impact of the COVID-19 pandemic, cost management and reduction is top of mind (56%) as is delivering competitive compensation and benefits (55%), a November poll of 138 Human Resource leaders revealed.
Vicki Fan, Mercer’s CEO for Hong Kong said, “With continued economic uncertainty ahead, we see employers still leaning towards cost management measures to ensure business continuity. However, for longer term success including retention of key talent, organisations need to balance cost with employee experience as it will be vital for recovery.
Salary budgets may have gotten tighter, but employers have an opportunity to look beyond pay and implement benefits and rewards initiatives such as flexible working hours and well-being programmes to continue engaging and supporting their people. With growing expectations of employees for access to physical, financial, emotional and social well-being resources, companies can reimagine benefits for greater personalisation and allocate their spend to where it counts most.”
Bonuses expected to decrease in 2021
19% of companies foresee a reduction in bonus payouts and 16% indicated they may not pay out bonuses at all. 9% of companies may also reduce sales commission payout.
Brian Sy, Head of Career Products & Total Rewards, Hong Kong, Mercer, said, “Both 2019 and 2020 were challenging years for Hong Kong businesses due to civil unrest and an economic upheaval triggered by the COVID-19 pandemic. While the impact is uneven across industries with high tech and life sciences still fairly resilient, we can expect bonuses in 2021 to shrink further on the back of sustained economic uncertainty.”
Focus on Benefits to Energize Employees
Although affordability is a key criterion for making decisions on salary increases, organizations are taking a more holistic view on redesigning the work experience for their employees, including the provision of additional incentives and benefits.
Eight in 10 companies surveyed have either implemented or are considering flexible working arrangements in response to the COVID-19 outbreak. Additionally, 30% of companies have provided work-from-home tools and subsidies to their employees. Support includes laptops, allowances to cover work-from-home related costs, access to external online learning, and one-time subsidies for home office setup costs.
Mr Sy said, “It is more critical than ever that business leaders make informed decisions about their people and compensation strategies. We are partnering with clients to better design agile and employee-centric reward packages so they can stay ahead of the curve.”
About Mercer’s Total Remuneration Survey
The Total Remuneration Survey, Mercer’s flagship annual compensation and benefits benchmarking study, identifies current pay practices and benefits policies, as well as budget, hiring and turnover trends for the year ahead. In addition, Mercer also conducts regular pulse surveys throughout the year to keep up with the impact of the rapidly changing business environment and compensation and workforce trends.
Mercer builds brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s more than 25,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a business of Marsh & McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 75,000 colleagues and annualized revenue approaching $17 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com. Follow Mercer on Twitter @Mercer.