Even as the people of Hong Kong didn't have higher salary increase than those of the Chinese mainland or India, the development is healthy, said a survey.

Hong Kong people will enjoy a salary increase of 3.8 per cent next year, but that is lower than the increase in the Chinese mainland and India, a survey revealed.

A study by Hewitt Associates, involving about 150 Hong Kong companies, found that Hong Kong people enjoyed a 2.9 and 3.9 per cent pay rise in 2005 and 2006 respectively.

However, last year the pay rise in the mainland and India was 8 per cent and 13.5 per cent respectively. Both countries are expected to have a pay rise of 7.9 per cent and 13.7 per cent in 2007.

Macao would also enjoy significant pay rise because of the economic resurgence caused by casino and tourism. It was expected that the pay for middle management in Macao would be increased by 6 per cent, while pay for professional would be increased by 10.1 per cent.

Hong Kong's middle management is expected to have a pay rise of 4 per cent in 2007, and professional staff would earn 4.1 per cent more.

The group managing consultant Vincent Gauthier said Hong Kong recorded less salary increase because the SAR's economy had been mature, and employees were already paid more than other places.

"It indicates that there is a shortage of talents in these places. It is a distortion of the market," he said.

Hong Kong companies also reported an average voluntary turnover rate between 10 and 17 per cent, compared to eight to 13.1 per cent last year.

Highest turnover levels

Human resources, sales and finance departments saw the highest level of turnover at 26.9 per cent, 19.7 per cent and 17.8 per cent respectively.

The group representative, Michael Yeung said Hong Kong people working on the mainland only had a pay rise of 4.8 per cent last year, and the city needn't fear losing talents to the nation.

Yeung, however, said companies having high turnover rate already had their operation affected, and some had launched their own survey to find out whether staff morale was low and what could be done to retain staff.

He urged companies to spend more resources on staff training and establish a succession mechanism to minimize the impact of staff quitting.

Companies had also focused more on providing fringe benefits, with 70 per cent of then giving assistance in education, 52 per cent giving transportation allowances and 44 per cent having housing benefits.

More than 75 per cent of companies reported that individual performance awards were still the most common means of giving employees short-term incentive to stay.

More than 45 per cent of them would also give team awards as incentive, compared with only 16 per cent last year.

Nearly 40 per cent of them would offer stock options to staff.

The study also found that the starting salary for fresh graduates with bachelor's degree was paid 3.7 times more than they would on mainland, while graduates having a master's degree received a salary three times higher than on mainland.