Hong Kong’s unstable economy is creating significant concern in the job market -but not every sector is impacted.
By Michael Switow
More than six months after millions of Hong Kongers first took to the streets in opposition to an extradition bill that would have blurred the lines of the political and legal system that has defined the city since its return to China 22 years ago, the protests continue and repercussions ripple through the territory.
Hong Kong’s economy is contracting. Retail sales and tourism have slumped. One of the city’s flag carriers, Hong Kong Airlines, is struggling to stay afloat.
Yet whilst the city’s reputation as a financial hub may have taken a few dings, it remains an important gateway to China. The Hong Kong Exchange was the top market globally for new listings in 2019. The Hang Seng Index chalked up gains of more than 9 per cent, despite protests and trade tensions.
As one might expect in the face of conflicting trends, the environment for hiring and salaries in Hong Kong is far from uniform.
Smaller Pay Increments
“There is still active hiring but some companies have slowed down the process or put roles on hold,” says
Ricky Mui, managing director of specialist recruitment firm Robert Walters Hong Kong. “At the same time, we see talented professionals are less willing to change roles compared to prior years due to uncertainty and instability of market.”
Robert Walters estimates that individuals staying in their jobs will receive salary increments this year between 4 and 6 per cent, whilst those switching companies can expect between 10 and 15 per cent increases.
ECA International‘s survey of Hong Kong businesses, conducted last year, also predicted an average salary increment of 4 per cent, but the company’s regional director, Lee Quane, is skeptical about whether this will become a reality.
“We believe that given what’s going on in Hong Kong and the industries that have been affected -retail, services, tourism -it’s very unlikely that companies engaged in these sectors will be able to offer a 4 per cent salary increase in 2020, especially those that are focused on servicing the Hong Kong economy,” he says.
Quane adds that HR leaders should expect to see a polarisation between large multinationals who derive significant revenue from outside Hong Kong and smaller domestically-focused businesses. ECA International is also advising clients to pay employees a location or hardship allowance for postings to Hong Kong.
Media reports abound of companies shifting personnel out of Hong Kong.
“Some companies have either expressed their plan to move or are already relocating some of their regional headcounts to other Asian cities, such as Singapore, to minimise any risk of business disruption in the longer term,” notes Randstad‘s Head of Search and Selection for Greater China Natellie Sun.
According to Bloomberg, there has been a rise in applications from Hong Kong asset managers to open offices in Singapore, whilst CNBC reports an increase in property purchases in the Lion City by mainland Chinese, to the detriment of Hong Kong.
Yet for many companies, it is not an either-or situation. Morgan Stanley and Nomura, for example, have announced plans to increase staffing in both cities. This is perhaps indicative of the health of Hong Kong’s financial sector.
Finance, technology, and the intersection between the two are among the hottest sectors in Hong Kong. Digital banking is an area of particular growth, as Hong Kong issued eight virtual banking licenses last year.
“It is not uncommon for tech talent to receive frequent job interview invitations on a daily basis or multiple job offers when they express interest in finding a new employer,” says Sun. “Based on current market demand, these candidates are likely to secure a premium of up to 35 per cent salary raise when they change employers.”
Companies are increasingly turning to temporary contract workers to meet these needs. “This is especially the case in the financial services sector, where IT skill sets such as project management, infrastructure, application support, help desk support, and risk and compliance are in high demand,” says Mui.
High-tech startups are among the companies looking for talent -but they may have to pay a premium. More than one-third of Hong Kongers would give up 10 per cent or more of their salary in exchange for better job security, according to Randstad’s Employer Brand Research, a trend that benefits more established companies.
“There are still many opportunities in this market and Hong Kong retains its appeal, especially with the much-anticipated signing of the ‘Phase 1′ trade deal between the United States and China,” concludes Mui. “This will inject some confidence back into the market, but in a period where budgets are comparatively tight, a positive workplace and corporate culture is important to attract talent.”