3.2% salary increase forecast in 2022 for HK

A 3.2% average salary hike is predicted next year in Hong Kong, 0.7% higher than in 2021. After factoring in inflation, the real salary increase in Hong Kong will be 1.1%, which is almost double the real increase seen in 2021. Yet, Hong Kong still lags behind many other Asian nations though, including Singapore, Taiwan and China. This, according to the latest Salary Trends Report by ECA International (ECA) as APAC rebounds from the economic effects of COVID-19.

The average rate of salary growth for workers in Hong Kong was 2.5% in 2021—slightly higher than the 2.1% anticipated by companies in the 2020 survey. However, businesses are expecting a greater level of economic recovery in 2022 and salaries are set to increase by 3.2 % next year. After factoring the forecast 2.1% inflation for next year, this means workers in Hong Kong will be left seeing a real salary increase of 1.1% - almost double the real salary increase of 0.6% that was seen this year.

Lee Quane, Regional Director – Asia at ECA International, said, “Hopefully, workers in Hong Kong will be pleased to see their salaries are set to increase again next year, with a much needed 3.2% boost on average before inflation. Employers in the APAC region are increasingly optimistic in their financial outlook for the coming year and as the world begins to once again open up, and business and the economy in general look set to improve. The forecast for 2022 is also further improved by the fact that a much lower percentage of companies are expecting to enact salary freezes next year—down to 11% in Hong Kong compared with 18% this year.”

"Compared to salary trends in other Asian nations, Hong Kong still lags behind many of its neighbours. Workers in Singapore and Taiwan are predicted to see bigger salary increases in 2022.”

Quane added, “However, when compared to salary trends in other Asian nations, Hong Kong still lags behind many of its neighbours. Workers in Singapore and Taiwan are predicted to see bigger salary increases in 2022, both forecast to see increases of 3.5%, while employees in China are expected to see an average salary increase of 5.8%.”

Asia highlights
As in previous years, APAC is expected to lead the way once again in terms of salary increases for workers with a predicted average real increase of 1.9% across the region as a whole. This is higher than any other region, with the global real salary increase forecast to be just 0.9% on average. Quane explained, “Although some regions, such as the Americas and Africa and the Middle East, have higher nominal salary increases forecasted, the APAC region is predicted to have much lower levels of inflation in 2022. This means that once inflation is taken into account, workers in Asia will see a much higher real salary increase than anywhere else in the world.”

Singapore looks to follow the overall positive trend in Asia, with expected average salary increases of 3.5% for workers in 2022. Unlike in many countries around the world inflation looks set to stay at around the same levels as this year, at 1.5%, so employees in Singapore will see a real salary increase of 2.0% on average.

Quane said, “Workers in Singapore are set to see a notably higher increase to their salaries than in previous years, with the predicted 3.5% rise up from 2.8% this year and 2.5% in 2020 though still a little lower than the pre-pandemic trend. Similarly, we are forecasting that just 6% of companies based in Singapore will implement a pay freeze in 2022, significantly down from the 22% that put in a pay freeze this year. This all points to a much-improved outlook for workers in Singapore as the economy bounces back from Covid related restrictions and uncertainty.”

Taiwan saw a slight jump in the forecast average salary increase—up to 3.5% in 2022 compared to 3.2% this year and in real terms, an increase of 2.0% compared to 1.6% this year. Quane noted, “Taiwan managed to escape many of the worst economic effects caused by the Covid-19 pandemic due to its early success in mitigating the spread of the virus. Therefore, although the year on year rise in the rate of salary growth of 0.3% is fairly small, this is due to the fact that companies in Taiwan managed to keep a fairly stable level of salary increases over the past few years. Indeed, Taiwanese salaries have rebounded more broadly than some of its neighbours with only 9% of workers seeing a salary freeze this year compared to 22% in Singapore and 18% in Hong Kong.”

Workers in China are predicted to see the second biggest salary increase in the region next year in real terms at 4.0%, only surpassed by Vietnam. Quane explained, “At this point in time, workers in China are expected to see the largest real salary increase in Asia in 2022. However, there are several threats to this which include the extent to which China’s zero-COVID policy may impact economic growth as well as the potential for inflation rates in 2022 to exceed forecasted levels.”

South-East Asian nations will be amongst those countries expected to see the fastest rate of salary increase in 2022 versus 2021 as their economies recover. This includes Indonesia, Vietnam, Thailand and Malaysia as their economies begin to recover from the effects of the COVID-19 pandemic and international travel begins to resume. Quane highlighted, “Indonesia and Malaysia were among the countries most impacted by the pandemic and are expected to see some of the biggest jumps in rates of salary growth in Asia in 2022 compared to 2021, as their respective economies start to return to normality after the pandemic. If these countries are able to keep inflation under control in 2022, the improved economic outlook will mean that real salary increase rates for workers in these countries will be some of the highest in the region.”

Global highlights
Beyond Asia, the outlook looks set to be much more mixed as the average salary increase globally is predicted to be 4.6%—however, when factoring the higher levels of inflation elsewhere in the world, the real salary increase worldwide will be just 0.9%. Quane added, “Despite many Asian nations expecting to see real salaries increase both this year and next improving employee buying power, the same unfortunately cannot be said for everywhere as supply chain issues and rising gas prices have fuelled inflation while the effects of the pandemic continue to take their toll on salary increases for many. This trend looks set to continue for workers in many locations who will see decreases to their salaries in real terms next year, as inflation outstrips any nominal increase. This is even the case for a major economy such as the United States where workers will see a 0.5% decrease in real terms.”

Argentina is once again at the bottom of the rankings with a forecast real salary decrease of 10% in 2022 despite the fact that inflation is predicted to halve to 25.0% in from 51.4% this year.

Top ten forecast APAC real salary increases