Hong Kong employees get highest salary increases in Greater Bay Area this year but trend unlikely to continue over long-term

Hong Kong companies offered the biggest salary increases over the past year compared with other cities in the Greater Bay Area, but the financial hub also had a high staff turnover rate, a study by universities and other organisations has found.

The survey team said on Wednesday the increases, from 3.2 to 3.8 per cent, were close to pre-pandemic levels and higher than those in Macau and eight cities in Guangdong province.

They added that the trend in Hong Kong was expected to continue into 2024 with pay rises of between 3.5 and 3.8 per cent, but the city may not retain the top spot.

Salary rises recorded in Hong Kong in 2019, the year before the pandemic hit, ranged from 3.9 to 4.1 per cent.

“This simply reflects the short-term economic situation in Hong Kong and also in the Greater Bay Area,” Huang Xu, associate dean of the School of Business at Baptist University, said of the 2023 figures.

“Because of Covid, we see a significant drop in the economic activities and the manufacturing activities in the Greater Bay Area, but Hong Kong remained pretty resilient in terms of economic activity, even during the pandemic.”

The study, carried out by several universities and human resources associations in the region between July and September this year, analysed salaries and benefits offered by 292 companies in the area, involving about 183,000 employees.

The survey found that Hong Kong had the biggest salary increases in 2023, but also had the second-largest staff turnover.

Beijing plans to turn the Greater Bay Area – which includes nine cities in Guangdong province and Hong Kong and Macau – into an economic powerhouse by 2035.

It is hoped it will outstrip economic giants such as Tokyo Bay, the New York metro region and the San Francisco Bay area.

The Greater Bay Area, with a population of more than 86 million, had a GDP exceeding 13 trillion yuan in 2022.

Statistics showed that, between July 2022 and June this year, employees of Hong Kong companies were awarded pay increases of between 3.2 and 3.8 per cent, depending on their roles.

People in frontline or operational roles and middle level, supervisory and technical staff got the biggest increase at 3.8 per cent. Senior and managerial staff were awarded the lowest raises at 3.2 per cent.

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But the increases were higher than companies in Macau and eight other cities in Guangdong.

Employees in Macau got increases of between 1.9 per cent and 2.7 per cent and workers in other bay area cities saw raises of between 2 and 2.2 per cent.

The eight mainland cities were Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou and Jiangmen. Zhaoqing was excluded as there were not enough survey respondents.

It is the first time in five years the researchers have recorded the biggest increases for Hong Kong companies, but they said that could be explained by the impact of the Covid-19 pandemic on mainland China.

Huang also warned that the situation could be short-lived as the rest of the Greater Bay Area still had considerable development potential, unlike Hong Kong which was already a developed economy.

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The study also found that Hong Kong ranked second among the 10 cities for the average staff turnover rate at 21 per cent.

Dongguan at 31.8 per cent had the highest level of staff movement and Zhongshan was third with 20.4 per cent.

“I think the turnover in Hong Kong basically reflects the movement of labour, the movement of employees across different industries and different firms, that reflects economic activities,” Huang explained.

Felix Yip Wai-kwong, assistant director at the Centre of Human Resources Strategy and Development at Baptist University, added that Hong Kong’s low unemployment rate encouraged a high staff turnover because people were more willing to take advantage of opportunities elsewhere.

Yip added that if companies wanted to hit the 2024 benchmark for salary increases, they would have to ensure profitability by cutting costs and authorities would also have to make sure the economy remained on an upward trend.

Other organisations involved in the study included the South China University of Technology, the University of Macau, the Hong Kong People Management Association, the Talent Development and Management Association of Guangdong and the Macau Greater Bay Area Human Resources Association.