Employers must compete on salary to attract and retain talent in Hong Kong

KPMG has released the 2018 edition of its Hong Kong Recruitment & Salary Outlook analysis. The analysis identifies current trends in Hong Kong’s recruitment market, advises on how companies can better manage their talent, and provides examples of salaries for specific roles across multiple sectors.

The undertone of the Hong Kong Recruitment & Salary Outlook 2018 is of talent retention in a period of projected economic growth. The city is benefiting from a number of strategic initiatives set by China including the Belt and Road Initiative and the plan to integrate the Greater Bay Area. The city also attracts foreign investment and international business with a stable regulatory system and transparent tax regime. Combined, these factors lend Hong Kong a competitive edge, especially as Chinese corporates are using the city as a stepping stone for regional or global expansion.

For the analysis, KPMG surveyed 600 business executives in Hong Kong across a number of key industries, including consumer markets, financial services, industrial and manufacturing, professional services, real estate and technology. Into its second edition, the report shares the firm’s views on the key employment opportunities resulting from recent market trends such as technological developments and increased interest from the Chinese mainland in Hong Kong’s financial sector.

According to the report, the employment market in Hong Kong will continue rising with a growing technology sector, with the city’s aims to become a world smart-city leader propelling technological advancement. Sectors that are traditionally offline will also benefit from the integration of smart technology and innovation. Businesses are currently improving their online-to-offline customer relations and the introduction of AI and robotics are set to have an impact on cognitive tasks. These sectors are bound to bring benefits to the city but they’re only likely to be reachable if there is a sufficient tech-talent.

What the talent pool wants in Hong Kong

KPMG asked respondents what their main factor for changing jobs would be. Of the four options, the majority (43%) answered that increasing salary would be the main trigger for switching employers, followed by company culture (28%), job security (17%), and relationship with supervisor (12%). This reflects the practical nature of citizens and the rising costs of living in Hong Kong.

Although the denizens of Hong Kong were financially driven to change jobs, they expected much less to continue on in their current position. Keeping existing staff satisfied is important to manage costs as respondents expected only 2.5% - 4% for an annual wage increase, which is in line with inflation. Hiring new staff however according to the report was less financially viable, especially if the applicant was not actively looking for a new position.

For an active job seeker, over half the respondents indicated that they would require a minimum of 20% increase, and for a non-active job seeker that number rose dramatically (79%). On the other hand, 35% of active job seekers and only 15% of non-active job seekers would be satisfied with a 10% increase.

This puts a strain on companies and identifies two key outcomes of the 2018 Hong Kong’s Recruitment & Salary Outlook. In order to reduce costs and manage staff expectations, companies should focus their recruitment efforts on active job seekers and retaining talent. Employers must also focus on improving company culture and creating a solid corporate image to compete in attracting talent.

Hong Kong too expensive to compete?

A key aspect highlighted in the report is how organisations can minimise human capital costs. However, Hong Kong is one of the most expensive cities in the world and has some of the highest rents in Asia. Financial renumeration is thus, a major factor in retaining top-talent. The city is flatlining on population growth with the most recent census showing a net loss of over 20,000 residents in 2017.

Unaffordable housing and stagnating wages have been cited as reasons why Hongkongers are moving abroad. Hong Kong has held three unattractive titles in recent years; most expensive city in Asia, smallest average flat size in the world (approximately 140m²), and most expensive city for business travellers in Asia.

Looking directly at the figures from the salary outlook, a starter working as a compliance officer in the banking sector (1-3 years) with the monthly wage of HKD$ 15,000 - 30,000 will be earning roughly the same as the price of a studio apartment. The Head of Compliance in the same sector will be earning between HKD$ 150,000 - 200,000 after 15+ years of work and are likely to pay just under half of that on rent.

The increasing cost of living in the city is key in taking into account how to retain talent. Organisations must employ means of retention in monetary forms including attractive remuneration and deferred bonuses. “In addition to increasingly competitive salaries, we are witnessing more companies paying higher bonuses in order to reward and retain talents who make positive contributions to a firm’s performance,” said Michelle Hui, Director at KPMG’s Executive Search and Recruitment Services.

Related: Asian cities rank as most expensive in global Mercer survey.