Companies plan to keep paying more, survey indicates Hong Kong workers this year received the highest salary increase since 2002 and the trend will probably continue, a survey has found. But the Institute of Human Resources Management said pay rises had become a less important incentive to retain talent. Firms would need to provide more non-monetary measures such as improved working environments to keep staff. The institute interviewed 113 companies with a total workforce of 140,000 people from January to October. Among the 105 companies that provided data, there had been an average base salary increase of 2.4 per cent. This compared with a rise of 1.7 per cent last year. This year's increase was also the highest since 2002. Employees in banking enjoyed the highest average pay rise (4.4 per cent), followed by those in logistics (3.2 per cent). The survey showed that 98 per cent of companies had given an overall pay rise, while only 2 per cent did not. Last year, 84 per cent of companies gave rises and 16 per cent froze pay. No company surveyed cut pay in the two years. A total of 77 per cent of workers also enjoyed a pay rise this year, compared to 67.5 per cent last year. The trend will probably continue, with 93.5 per cent of the 46 companies adjusting salary levels in January to April next year saying they projected a pay rise of at least 3 per cent, institute president Lai Kam-tong reported. He said the improved economy was the main reason for the pay rise, but increased competition to hire the right talent also pushed salary levels up, with 81.2 per cent of the companies saying they needed to offer higher pay when hiring replacements for management jobs, followed by banking, accounting and finance jobs (49.2 per cent). Mr Lai said the comparatively high increase in the banking sector showed a lack of talent in the industry, especially after banks introduced many new products to the market. Institute remuneration committee co-chairman Mak Ping-on said if Hong Kong continued to develop itself as an international financial centre, more staff would be needed. 'You might think the banking and finance sector is already booming but the fact is we are still lacking a lot of manpower,' he said. This was especially the case for risk management and financial and wealth management. The survey showed 65.5 per cent of the companies saw an increase in staff turnover in the past year, with the group most likely to quit aged 23 to 34 and serving for one to three years with a salary of HK$10,000 to HK$19,999. Mr Lai said the increase in turnover showed pay rises were no longer the only factor to retain staff. 'There might be an increase in the pay rise percentage but it's just 2 to 3 per cent, compared to the period prior to 1997, which had a double-digit increase each year,' he said. Companies would have to use other means to retain talent, such as improving employees' quality of life by lowering their workload and providing more training. Mr Mak said this would affect the competitiveness of Hong Kong when having to compete with foreign countries for talent. 'Hong Kong remains the highest-paid among neighbouring regions but it really depends on if we can provide other good factors to attract foreign talent to work in Hong Kong.'