Hong Kong has been diagnosed with intense overall wage pressure for the third year in a row, according to the 2016 Hays Global Skills Index released today which assesses the efficiency of skilled labour markets in 33 countries.
The Hays Global Skills Index, produced in collaboration with Oxford Economics, gave Hong Kong an overall score of 4.5 unchanged since 2015. Seven indicators, or points of potential pressure, make up the overall score and each received a score out of 10. A score close to 0 indicates little to no pressure, while a score close to 10 shows severe pressure.
“Hong Kong’s position as a leading global financial centre and regional hub remains stable with continuous candidate demand and vacancy activity indicating positive business sentiment,” says Dean Stallard, Regional Director of Hays in Hong Kong.
The Index shows that in Hong Kong, pressure on labour market can be attributed to three key indicators. The first is ‘overall wage pressure’, which measures whether wages are keeping pace with historic trends. Hong Kong’s score was slightly alleviated this year to 9.3 from the highest possible score of 10.0 for the past two years in a row.
“Despite a small reduction, upwards wage pressure is still a very real concern for employers in Hong Kong as they seek to secure the right talent,” Dean explains.
The second indicator or pressure point is ‘wage pressure in high-skill industries’, which measures the rate at which wages in high-skill industries outpace those in low-skill industries. Hong Kong received a score of 6.2, unchanged since 2015, suggesting that wages in high-skill industries continue to rise much quicker than those in low-skill industries.
“Wage pressures are particularly felt in industries such as technology, e-commerce and life sciences for example, where employers find it difficult to secure niche candidates and as such offer a premium to secure them,” Dean adds.
The third indicator is ‘labour market participation’, where Hong Kong received a score of 6.2 showing the available workforce isn’t increasing in great numbers as the labour market continues to remain tight as it has been for the past few years.
For the remaining indicators, the Hays Global Skills Index scored Hong Kong fairly positively. This includes a score of 1.8 for ‘education flexibility’ owing to a relevant education system that is well equipped to meet future talent needs.
Increasing government regulations caused a slight increase from 2.4 to 2.7 for ‘labour market flexibility’, but this is still a low pressure point overall. Hong Kong’s score of 5.0 for ‘talent mismatch’ means candidates usually possess the skills employers are looking for. These are all positives for labour market since they indicate low to moderate pressure points.
An interesting finding is that while Hong Kong received a high score for ‘wage pressure in high-skill industries’, it received 0.0 for the second year in a row for ‘wage pressure in high-skill occupations.’
This suggests that wages for highly-skilled candidates such as managers, senior officials or skilled trades are rising slower than for low-skilled candidates such as process, plant and machines operatives, and administration workers.
Dean concludes, “Despite slight easing in overall wage pressure compared to previous years, talent shortages and increasing regulations continue to cause a tight labour market, and employers must continue to be flexible and innovative to attract top talent.”