Doing more with less: Employers in Hong Kong rethink benefits as costs soar

As economic uncertainty deepens and medical inflation continues to soar, employers in Hong Kong are under mounting pressure to deliver more with less when it comes to employee benefits.

According to WTW’s 2025 Benefits Trends Survey, 81% of employers in Hong Kong now cite rising benefit costs as their top concern, a significant increase from 64% in 2023. This is reshaping how HR leaders approach benefits strategy, prompting a shift toward smarter spending and a sharper focus on what truly delivers value.

“Budget constraints, talent issues and the uncertainty on potential impact on tariffs show no signs of easing soon,” Eric Lam, Head of Health and Benefits, Hong Kong and Macau, WTW, told HRM Asia. “Organisations are taking a step back and looking to focus on what drives real value for employees and their business.”

While cost is the top concern, other factors also come into play. WTW’s research shows that 65% of employers also identify competition for talent as a key driver of their benefits strategy. Although slightly down from 77% in 2023, it remains a pressing issue in today’s tight labour market.

“This shows that organisations are still focusing on attracting and retaining talent through benefits,” Lam noted. “Combining this with the rising benefits cost and higher pressures on financial budgets, organisations in Hong Kong are seeing an even higher challenge to strike the right balance in money spent and value received from benefit programmes.”

Rather than expanding benefit offerings, Lam said organisations are prioritising more thoughtful allocation of existing budgets. “We found that organisations are not expanding their benefit portfolio. Instead, with a similar budget, organisations are going to focus on benefits spending that brings higher value to both employers and employees.”

With medical costs in Hong Kong projected to rise by 9.8% in 2025, organisations are urgently reevaluating how to extract more value from their benefits spend. WTW’s survey revealed that 58% of employers intend to reallocate or rebalance their spending over the next three years, and 61% aim to enhance value or switch to more cost-effective vendors.

Lam emphasised that smarter spending begins with analytics. “Each organisation is unique and by using data analytics to identify the area of focus in benefits, they can reallocate their budget spend to get more value from current investments,” he explained.

That includes not only vendor optimisation but also improving employee communication, using behavioural nudges to encourage smarter utilisation of benefits, and ensuring the benefits offered match employee needs.

Beyond cost optimisation, the evolving expectations of a diverse, multigenerational workforce are also forcing a rethink of traditional benefits design.  WTW’s 2024 Global Benefits Attitude Survey found that 82% of employees in Hong Kong consider the benefits package an essential reason for joining an organisation, and 71% say it is a significant factor in staying.

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“Since the pandemic, employees find benefits packages to be an important driver for their decision to join or remain with their employer,” said Lam. “It is henceforth very important for employers to provide choice and flexibility to cater for the diverse and multigenerational workforce to ensure their benefits programmes meet their employees’ needs.”

That means enabling personalisation and inclusivity. “Providing inclusive healthcare, such as the inclusion of family planning benefits, gender-specific health screenings and mental wellbeing benefits, will be appreciated by employees,” he said. “In addition, enabling employees to customise choices for their benefits package will also allow peace of mind for employees to stay focused on work.”

Lam will further explore these themes at CHRO Hong Kong 2025, an event organised by HRM Asia that brings together the city’s top HR leaders to chart the future of work. His presentation, Enhancing the Business Value of Employee Wellbeing and Effectiveness of Benefits Design, will offer a 360-degree view of workforce wellbeing needs and how to align benefits strategy with evolving employee expectations.

The session will focus on building a multi-year benefits roadmap to support a healthy and high-performing workforce. It will also cover how to apply segmented approaches to ensure that different employee groups receive the support they value most.

Held against the backdrop of AI disruption, digital transformation, and shifting employee values, CHRO Hong Kong 2025 aims to equip HR leaders with the tools they need to navigate complex challenges while driving sustainable business growth. To find out more about CHRO Hong Kong, click here.