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Hong Kong has been ranked the world’s freest economy for over the last 17 years.  It is expected to grow 5.5% in 2011.  Despite the economic downturn, the territory’s unemployment rate has continued to fall from 4.3% by mid-2007 to 3.6% by mid-2011.  The four pillars of Hong Kong’s economy are trade and logistics, tourism, financial services and professional services.

Even though Hong Kong is now a Special Administrative Region of China, it has maintained its well-established labor laws based on the British system, not China’s.  Also in place are mandatory provident fund schemes.  Even though the territory has over 700 registered trade unions, there have been few major labor disputes or strikes. 

Hong Kong has a highly conducive business environment.  It enjoys very low tax rates, has a strong legal system, and is tough on corruption.

 

Wages and Compensation

Wage levels in Hong Kong were previously fixed by individual agreements between employers and employees.  However, a new minimum hourly wage law has recently been implemented at HK $28, or $3.60.  The minimum wage is expected to benefit approximately 10% of Hong Kong’s working population.  Domestic helpers are not covered under this legislation. 

Salaries for local professionals are similar to or greater than those in the United States.  This is mainly due to the high cost of living, especially in terms of housing.  Almost half of Hong Kong’s population lives in rental housing, and there is a high demand for quality apartments and houses.

Companies in Hong Kong generally give out Chinese New Year or “13th month” bonuses.  The amount is generally equivalent to one month’s salary or more, and is usually paid at Chinese New Year in January or February.  If a bonus is mentioned in a contract, it must be paid unless specifically noted as discretionary.  If an amount is not specified, at least one month’s salary is standard.

 

Other Benefits

Hong Kong’s Mandatory Provident Fund Schemes Ordinance came into effect in December 2000.  It covers all employees between 18 and 65, including part-time workers and foreign employees who are employed for over 13 months.  Under the scheme, employers contribute 5% of the employee’s monthly salary.  Employees are exempt from contributing if their income is less than HK $5,000/month ($640/month) or less than HK $60,000/year ($7,686/year).  The fund is transferable and can be carried to an employee’s new job in the event of a job switch.

In July 2011, China implemented the Social Insurance Law, its first comprehensive and unified insurance scheme. As a Special Administrative Region, Hong Kong also falls under this coverage. Under the Social Insurance Law, it is mandatory for all employers to contribute to pension, medical, unemployment, work-related injury and maternity insurance. Employees must only contribute to pension, medical and unemployment insurance. Local governments choose the contribution rates required.  For the first time, foreign workers must participate in the local insurance system. 

For maternity leave, the Employment Ordinance states that maternity leave pay should be equal to 80% of the salary earned by the employee in the year before the first day of leave.   Maternity leave must be granted for a minimum of ten weeks.

While expatriate packages were common in the past, they have become less so in recent years.  There is currently no great disparity in the salaries of expatriates and locals in senior positions. 

But for expatriate positions, housing, education and home leave can still add up to a high compensation package.  Indeed, the pollution in Hong Kong has become so severe that more than half of Hong Kong-based companies have been forced to increase their offers to expatriates put off by rising pollution.  Firms either had to offer a higher salary package or disburse higher housing allowances.

 

Foreign Employees in Hong Kong

As a cosmopolitan city with over 7 million people, Hong Kong has over 500,000 foreigners.  Many are domestic staff and manual laborers from the Philippines, Thailand, Sri Lanka and India.  Others are top executives at global firms.

Work permits are usually granted without much delay for professional staff and skilled executives.  In 1999, the Hong Kong government implemented the Admission of Talents Scheme.  While primarily aimed at Mainland Chinese talent, it is also open to those from other countries.  Successful candidates will normally be granted employment entry permits/visas with an initial stay of 12 months upon entry.  The candidates may then apply for extensions of stay before their permits or visas expire.

In 2003, the government introduced a second scheme to let in highly skilled Mainland Chinese talent.  Known as the Admission Scheme for Mainland Talents and Professionals, it aims to increase the competitiveness of local companies and facilitate the further development of Hong Kong.  Successful candidates will normally be granted an initial stay of 12 months upon entry.  Extension of stay will be approved if the candidates continue to meet the eligibility criteria.  Application for change of employment will generally not be considered in the first year of admission.  But this restriction will be lifted one year after admission, provided the candidates continue to fulfill the eligibility criteria, and are employed in jobs relevant to their qualifications and expertise.

 

Recruiting Trends

Labor Flow from Hong Kong to China - Given China’s rapid development, many Hong Kong residents have either looked to or already relocated to the mainland for what they see as better and more lucrative job opportunities.  One of the greatest attractions of working on the mainland is the higher salary.  While average salaries for those working in Hong Kong rose by only 3.8% in 2010, those who worked in China witnessed a 14% increase.  As compared to local Chinese, Hong Kong expatriates are well paid, and the cost of living on the mainland is also significantly lower as compared to Hong Kong.  As a result, some Hong Kong residents have even relocated their entire families to the mainland.

Quality Migrant Admission Scheme – This Scheme was initiated in July 2006 in order to attract foreign talent to Hong Kong.  Even though it is open to all nationalities, the Scheme specifically targets mainland Chinese with exceptional skills or academic qualifications.  Especially welcomed are those trained in finance and accounting. Revisions have allowed non-residents to settle in Hong Kong without securing a job beforehand and lowering the minimum period of work experience form five years to two.

 

Recruiting Strategies

Newspapers – This traditional method is highly effective when it comes to recruiting lower and middle level positions.  Many job seekers still turn to newspapers when searching for jobs, particularly the Oriental Daily, South China Morning Post and The Standard.  The first three are Chinese-language dailies, while the remaining two English dailies. 

Websites – Hong Kong residents are generally internet-savvy and many turn to the Internet for job listings.  Generally, professional level jobs will be taken more seriously if they are posted in English on English-language job boards.  Recruiters may find that more people are likely to respond to Internet postings than those in newspapers.  Popular English-language job boards include www.classifiedpost.com, www.monster.com.hk, www.jiujik.com.hk, and www.jobsdb.com.

Personal connections – As in China, personal connections are important in Hong Kong, especially networks of personal relationships in the business world.  These inside connections can be useful in hiring, and can strengthen the bond between employers and employees.

 

Recruiting Trends

University Recruiting – Universities in Hong Kong generally have very helpful and cooperative career centers that help match employers and employees.  Top universities in the territory include University of Hong Kong, Chinese University of Hong Kong, the Hong Kong Polytechnic University, and Hong Kong University of Science and Technology (HKUST).

MBA Recruiting – In recent years, MBA programs with an Asian-focus have become increasingly popular among Hong Kong professionals.  Several American universities have highly competitive MBA programs in Hong Kong. Examples are the Kellogg-HKUST executive MBA program and Tippie School of Management’s International MBA Program in Hong Kong.  Many professionals see these programs as a means to acquire more managerial knowledge, as well as to get ahead in their careers.