Employers in Hong Kong rethink 2025 salary plans

Nearly one in four organisations in Hong Kong are weighing a salary freeze for employees in 2025, with another 18% considering smaller wage increases, according to a new survey by the Hong Kong Institute of Human Resource Management (HRIHRM). The findings reflect growing caution in the private sector following the government’s recent announcement to freeze civil servant pay and slash 10,000 public sector roles.

Hong Kong Financial Secretary Paul Chan’s move to freeze civil servant wages and implement job cuts aimed to rein the city’s HK$87.2 million (US$11.21 billion) deficit. The budget decision has reverberated throughout the private sector, influencing corporate decisions around compensation and workforce planning.

According to the survey, 42.7% of organisations acknowledged that the government’s pay freeze had affected their thinking around 2025 salary adjustments. Of these, 24.4% were considering a complete pay freeze, while 18.3% said they might lower the scale of wage increases. About a third (34%) of respondents indicated no change to their pay strategies, and 23% remained undecided.

Despite this cautious tone, not all employers are pulling back. Among the organisations that had already implemented or budgeted for base pay adjustments prior to the government’s announcement, 80% proceeded with a salary increase. Only 18% froze pay, and a small minority (2%) enacted pay cuts.

When asked about potential changes to headcount in light of the government’s fiscal stance, 31% of organisations said they were reviewing their manpower plans. However, nearly half (47%) expected no changes, while 22% were undecided. Looking ahead, 58% of organisations plan to freeze headcount this year, while 23% anticipate hiring increases. 19% expect to reduce employee numbers.

Despite these signals of restraint, HKIHRM President Lawrence Hung emphasised that not all employers are scaling back. He said, “While some employers may become more conservative in their approach to pay increases and manpower planning, still a significant portion of respondents have planned for pay increases and for either maintaining or increasing their current workforce.”

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HKIHRM estimated that employees can expect an average salary increase of 3-3.5% this year, based on its annual pay trend analysis, member input, and broader economic indicators.

Hung noted that although the government’s wage freeze has drawn attention, it is primarily a response to budgetary pressures rather than labour market shifts. “The Hong Kong labour market remains stable, with a low unemployment rate of 3.1%, reflecting strong demand for talent across various sectors,” he said.

Industries such as IT, banking, and insurance are expected to continue offering competitive salary packages and other incentives to attract and retain skilled professionals. HKIHRM’s pay trend survey also highlighted business performance, individual employee performance, and overall economic conditions as key factors influencing compensation strategies, reported SCMP.