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Workers in Hong Kong set to see recovery in salary increases in 2021

  • Salaries in Hong Kong are forecast to rise by 3% in 2021, an increase from 2.1% this year
  • Hong Kong salary increases in 2020 almost half of their 2019 levels
  • Most locations in Asia forecasting higher rates of increase in 2021
  • Real salary increase rates across the APAC region are forecast to be 1.7% in 2021

Workers in Hong Kong experienced a reduction in salary growth in 2020 as businesses were adversely impacted by an unfavourable economic situation due to both the socio-political tensions in the city and the impact of the Covid-19 pandemic.

The average rate of salary growth for workers in Hong Kong was 2.1% in 2020 pulled down by two in five employees getting no rise at all, almost half the 4% rate of increase provided in 2019. However, businesses are hopeful of an economic recovery in 2021 and are expecting salaries to increase by 3.0% on average in 2021 though one in four will get no salary increase. 

“Lower rates of salary growth in 2020 in Hong Kong are unsurprising given the impact of socio-political tensions and the Covid-19 pandemic on Hong Kong’s economy” said Lee Quane, Regional Director - Asia at ECA International. “The expected rebound to 3% in 2021 shows that employers are cautiously optimistic about the prospects for recovery next year. However, the fact that these rates remain lower than 2019 reveals that any recovery is likely to be gradual.”

In addition, real salary increases, which reflect increases in employee incomes after inflation is taken into consideration, will be relatively low in Hong Kong in 2021, at 0.6% after taking forecast inflation of 2.4% for 2021 into consideration. 

“Real salaries for Hong Kong residents, forecast to be 0.6% next year, will be amongst the lowest in the region. This compares unfavourably with expected rates of real increase in Singapore of 2.7% and may hinder the extent to which the Hong Kong economy may recover from the current recession”, adds Quane.

There is expected to be a major drop in the number of Hong Kong-based companies implementing salary freezes in 2021. 

Quane said “40 percent of organisations in Hong Kong applied salary freezes this year amid the pandemic and the devastating effect it had on the economy. However, in the face of a possible vaccine being rolled out next year, only 25% of companies are expecting these freezes to last into 2021 - offering signs of improvement to businesses and employees based in Hong Kong.”

ECA International is the world’s leading provider of information, software and expertise for the management and assignment of employees around the world. The annual Salary Trends Report analyses current and projected salary increases for local employees in 68 countries across the world.

Asia Highlights

All locations in the APAC region saw lower rates of salary growth in 2020, with an average salary increase of 3.2%. Companies anticipate a recovery in 2021 though, with the average salary increase in the region forecast to jump to 4.3%.

In terms of real salary increases, Asian countries once again dominate the top of the rankings, with eight of the top ten highest real salary increases expected to be seen in Asian nations. 

Quane said “The average real salary increase across the APAC region is forecast to be 1.7% which is significantly higher than the global average of 0.5%. However, the average level of inflation in Asia is forecast at 2.4% which is not far off the global average, and the real driver for the higher real salary increases in the APAC region is the sustained increase in productivity in many Asian nations, resulting in higher salary increases for workers.”

Workers in China will also see a recovery in the rates at which their salaries will grow in 2021. Workers can expect to receive a 5% salary increase on average next year, up from 3.8% in 2020. 

Quane explained “China’s economy seems to have weathered the impact of the Covid-19 pandemic better than many other locations in the region and this is reflected in the extent to which salaries are forecast to grow again in 2021. Real salary growth rates in China will only be surpassed by 4 other countries in the region. Indeed once inflation is factored in, the real incomes of workers in China will grow by 2.3% in 2021.”

Salaries for most employees in Macau did not increase in 2020, although they are expected to see some degree of recovery in 2021.

Quane explained “Companies froze salaries for their workers in Macau in 2020 at a higher rate than elsewhere in the region. This is likely to be reflective of the fact that many employers in the hospitality and leisure industries have been significantly affected by border closures in response to the Covid-19 pandemic.” 

Salaries in Singapore will grow at a faster pace in 2021 in comparison to this year. Furthermore, once inflation is taken into consideration, Singapore-based employees are likely to see a growth in their real salaries of 2.7%, which will be amongst the highest in the world and the second highest in the APAC region. 

Quane said “Singapore is expected to be joint third highest in our global rankings for real salary increases, and joint 2nd in the APAC region, despite the fact that the increase in 2021 is forecast to be lower than workers saw this year. Singapore has experienced consistently low inflation in recent years, even seeing deflation of -0.4% last year, and next year is no different with an expected inflation level of just 0.3%. This will result in higher real salary increases for workers compared to countries with higher inflation such as Hong Kong.”

Quane continued “The expected rise in salaries next year is largely due to fewer companies implementing salary freezes, with only 22 percent of those surveyed saying they will continue to freeze salaries into 2021, compared with 36 percent this year.”

Indonesia leads the way in this year’s APAC ranking list for real salary increases with a forecast increase of 3.8% - significantly higher than the joint second-place nations of Singapore and Thailand, where the increase is expected to be 2.7% in comparison.

“Few countries are expected to see a significant rise in the level of real salary increases in 2021, but there are exceptions to this within the APAC region. One of these is Indonesia which stands out at the top of the list and sees the average real salary increase rise from 2.6% this year to 3.8% in 2021. Inflation in the country is expected to continue falling, repeating the trend we have seen in Indonesia in recent years, but additionally fewer companies intend to freeze salaries, so the nominal increases have therefore risen. In fact our data shows that although 42 percent of our surveyed companies in Indonesia implemented a salary freeze this year, only 24 percent of these will do so in 2021 – contributing to the rise in average salary increases in the country.” said Quane.

Global Highlights

Outside of Asia, the outlook is very different for many nations, including many which are expected to see decreases to real salaries. This includes major economies such as the United States and Saudi Arabia.

Quane said “As the world struggles with the social and financial effects of the global pandemic, many economies have continued to feel the effects on their economies and therefore on salaries. Although many Asian nations are already seeing signs of recoveries, companies based in other parts of the world such as the US and Middle Eastern countries are approaching salary rises more conservatively and when inflation returns to normal levels next year as we expect, workers based in these countries are not expected to see above-inflation salary increases.” 

Argentina is once again at the bottom of the rankings with a forecast real salary decrease of -28.6%, as inflation is expected to stay at an alarmingly high level in 2021, reaching an enormous 43.0%.

Top ten forecast real salary increases – Asia Pacific
Country
2021 forecast real salary increase (%)
2020 real salary increase (%)
Indonesia
3.8
2.6
Thailand
2.7
4.1
Singapore
2.7
2.9
Korea Republic
2.6
1.5
China
2.3
0.9
India
2.3
-0.1
Cambodia
2.1
2.1
Bangladesh
2.1
-3.6
Taiwan
2.0
3.1
Japan
1.7
2.1

-ENDS-

Notes to Editors

About ECA’s Salary Trends Survey

The information above was taken from ECA's Salary Trends Survey 2020/2021. The survey reports current-year salary increases for local national employees and the anticipated increases for reviews in the forthcoming year. It is based on information collected from over 370 multinational companies for 68 countries. Reports are available free to all participants or for purchase either as a set or individually per country for non-participants from the ECA website.

The forecast average real salary increase in a country is calculated by looking at the predicted average nominal salary percentage increase (i.e. the salary increase given to employees by their employers) and subtracting the forecast inflation. E.g. if the average nominal salary increase in a country is 4% and inflation is at 2.1%, this would result in an average real salary increase of 1.9% (4%-2.1%=1.9%).

Data is based on increases including merit. Including merit is the total salary increase and represents general cost of living/inflationary increases plus performance/merit related increases. The data above was collected from August to September 2020. 

The survey included data from all seniorities across the following industry groups which included Energy, mining & petrochemicals; Chemical & pharmaceutical; Transport & logistics; Manufacturing & consumer goods; Legal & professional services; Engineering & technology; Retail, leisure & other services; Financial services; Non-profit.

About ECA International 

ECA International is the market-leading provider of knowledge, information and technology that enables businesses to manage their international reward programmes.

Partnering with thousands of clients on every continent, we provide a fully integrated suite of quality data, specialist software, consultancy and training. Our unparalleled insights guide clients as they mobilise their most valuable resource: people.

We make the complex world of international mobility simple, providing clients with the expertise and support they need to make the right decisions - every time.

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For further information, please contact:

Jack Firth 
Tel: +44 0 20 7351 5000
Email: Jack.Firth@eca-international.com

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