(From left) Michelle Hui, Director, Executive Search and Recruitment, KPMG China, heads the services operation of Hong Kong. She has over 20 years of experience in human resources, executive search, and structured assessment and selection processes. Lynn Deng, Manager, Tax, People Services, KPMG China, has over 10 years of experience in Hong Kong and China individual income tax matters. She has worked on numerous local and regional projects assisting clients on global mobility compliance and consulting projects.
Over the past year, the economy and employment market have been on the road to recovery. From the second half of 2021, business activity has gradually picked up amid loosening social distancing measures. Along with the recovering economy, the outlook of the 2022 employment market is optimistic – with an overall increase in headcount expectations.
KPMG’s Hong Kong Executive Salary Outlook 2022 collected views from 794 business executives to take a measure of the employment market and trends in Hong Kong and other Greater Bay Area (GBA) cities.
Along with the burgeoning business activities in the second half of the year, Hong Kong’s gross domestic product annual growth climbed to 6.4 percent in 2021. Overall, more than a third of the respondents expect a headcount increase in their Hong Kong operations this year. Both C-level executives and human resources professionals expect revenue generators to be the main area of focus for headcount increases, followed by operations and IT.
Signs that the employment market is opening up can be seen in job moves and salary increments. More respondents changed jobs in 2021 than during 2020 – and the salary increments for respondents who made career moves last year were found to be in line with their expectations, compared to 2020.
For those who stayed in their positions, pay rises and annual bonuses were more generous in 2021 than 2020 across most sectors, but particularly in the financial services sector. Currently, 63 percent of respondents anticipate a pay rise and 38 percent anticipate an increased bonus this year. In such a competitive talent market, employers should understand why employees seek new job opportunities in order to better manage talent.
Talent retention and attraction are major concerns for many employers. The drivers causing employees to seek a new job as well as the types of non-monetary benefits sought vary across seniority. Business leaders generally place greater emphasis on organizational culture when assessing new opportunities. While the assistant manager level and below put more emphasis on career progression and promotion, the manager and senior manager levels place greater weight on flexible work arrangements, work-life balance, workload and work pressure.
Meanwhile, offering an attractive compensation and benefits package forms a key component of pay strategy. Over the past five years, the key aspect driving employees to seek new job opportunities has consistently been the compensation package. Aside from the typical cash remuneration, medical and insurance coverage are commonly included as additional benefits. Many employers also offer talented staff a range of retirement, housing, flexible benefits and share scheme incentives. To remain a competitive employer in the talent market, it is essential for organizations to ensure their offerings are competitive and tailored to the talent being targeted.
With the fast-growing integration between Hong Kong and other GBA cities, the willingness of Hong Kong respondents to relocate to other GBA cities has consistently increased each year, reaching 72 percent in 2022 (compared with 52 percent in 2019). For the fourth year in a row, the innovation and technology, financial services and professional services sectors are believed to create the highest number of job opportunities in terms of GBA development.
Better prospects and travel convenience remain the top two drivers for such a move, while higher income has moved up the rankings, displacing broader work exposure from third place. Since 2019, municipal governments of the GBA cities have implemented a series of initiatives to attract top-tier or urgently-needed talent from outside Mainland China (including professionals with permanent resident status in Hong Kong, Macau and Taiwan) to work in the nine Mainland GBA cities. One of these initiatives is the availability of fiscal subsidies for qualified individuals.
Given the fiscal subsidies, and with respondents having an expectation of receiving a higher income or at least maintaining their current net income level upon relocation within the GBA, it is surprising to see that only a relatively small proportion are aware of, and have applied for, GBA income tax subsidies.
About the e-seminar
The e-seminar “The latest employment trends 2022 and employee tax incentives” available in June aims to provide our members with an overview of the talent trends and the relevant tax implications. With the backdrop of the improving economy but a tight talent market, our speakers will share highlights of the results and observations on the latest employment trends from KPMG’s Hong Kong Executive Salary Outlook 2022.
Their discussion will also cover GBA opportunities and key individual income tax developments, as well as the major factors in attracting and retaining employees, including compensation trends and tax implications in this talent war.