EMPLOYEES can expect smaller pay increases this year and increasing expectations from bosses that they will have to prove themselves through performance, according to the latest survey findings. But the survey also found that workers increasingly expect more benefits than cash when considering a job. The Wyatt Company's 1994 Compensation Report - Hong Kong Employees, which surveyed 178 employers from all sectors, found workers can expect salary increases of about 11 per cent. This continues the decline in increases from about 13.1 per cent in 1992 to12.3 per cent last year. The company greeted the findings as good news for business in Hong Kong, and not necessarily bad news for workers. Wyatt's senior compensation manager Doris Chan Yuek-lin said companies were tending more to vary bonuses and introduce performance-related pay. More than three-quarters of companies surveyed now had variable pay programmes compared with just over half in 1991, and this was likely to continue because of the territory's buoyant economy and tight labour market. Bonuses tended to be linked to company profitability and individual performance. ''If the company does well and the individual works hard for an outstanding performance, the reward is likely to be bigger,'' she said. Managers in industries such as the finance sector are particularly likely to have the variable part of their compensation calculated through a formula, probably related to targets set early in the year. The survey also found that employee benefits were improving, with twice as many companies introducing annual medical examinations than four years ago. Thirty per cent of companies now provided these annual medicals. Dental benefits also had become more popular, with 39 per cent of employers offering dental plans compared to 25 per cent four years ago. The survey found production managers received the biggest increases in cash pay in the 12 months until March 31, averaging 31 per cent over the year. Junior sales representatives and personnel and administration heads enjoyed the highest base salary increases. Sales representatives saw 28 per cent rises overall, while personnel and administration heads received 23 per cent pay rises in smaller companies and 22 per cent rises in larger organisations.