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Cost management remains the most prominent factor shaping salary budget decisions in Hong Kong, as employers take a more targeted approach to rewards and retention.
Hong Kong employers are taking a more measured approach to compensation planning, with salary increase budgets remaining relatively moderate as organisations balance cost management pressures against the need to retain critical talent, according to the latest Salary Budget Planning report by WTW.
The survey, conducted between March and May 2026, gathered responses from 34,024 companies across 156 countries and territories, including 637 organisations in Hong Kong.
The findings showed that actual salary increases in Hong Kong averaged 3.5% in 2026, down slightly from 3.7% in 2025.
Although salary increases are projected to edge up to 3.8% in 2027, the figure remains below the APAC average of 4.7% recorded in 2026.
Meanwhile, only 14.4% of surveyed employers said they plan to increase headcount over the next 12 months.
Compensation outlook remains stable but cautious
While 35% of Hong Kong employers reported no change in actual salary increase budgets compared with the previous compensation planning cycle, 34% said their budgets were lower and 27% reported increases.
Looking ahead to 2027, nearly half of surveyed employers expect salary budgets to remain unchanged, while 25% anticipate lower budgets and only 9% expect increases.
Top performers receive a larger share of salary increases
The survey also suggested Hong Kong employers are increasingly directing compensation resources towards high performers.
Employees receiving the highest performance ratings accounted for 11.1% of the workforce but received 21.8% of salary increase budgets.
By comparison, employees with average performance ratings represented 62.7% of the workforce yet received 57.3% of total salary increase allocations.
Cost pressures continue to shape pay decisions
Cost management is the leading factor influencing salary budget decisions in Hong Kong, cited by 41.1% of employers.
Other key considerations included:
- Anticipated recession or weaker financial results (26.0%)
- Inflationary pressures (23.3%)
- Concerns over a tighter labour market and/or the need to drive retention (20.5%)
According to the report, these pressures are reinforcing a more selective approach to salary increases, as employers balance affordability with the need to retain key skills.
Employers look beyond pay to retain talent
Despite the focus on compensation, the survey found that organisations have also taken a variety of total rewards actions to attract and retain talent.
These actions include:
- Improving employee experience (50%)
- Making changes to their health and wellness benefits (43%)
- Broader emphasis on DEI (34%)
The findings suggested that employers are placing greater emphasis on the full employee value proposition rather than relying solely on salary increases.
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