Accounting giant KPMG China on Thursday said its annual survey of bosses and working professionals here and on the mainland found that fewer companies were looking to increase headcount than a year ago.

However, the company's Executive Salary Outlook 2024 did find strong demand for high-quality professionals who can drive company growth, although expectations for pay rises had been reduced.

“From what we observed, in the current job market, employers tend to make hiring decisions more cautiously,” said Eric Cheng, director of executive search and recruitment for KPMG China in Hong Kong.

“More job seekers have lowered their job expectations of salary increment in a career move this year, and that may imply that employers may have a higher bargaining power when it comes to salary negotiations,” he added.

The report noted that only about a third of job seekers surveyed landed new jobs last year, reflecting continued challenges in the labour market.

Only 41 percent of C-level respondents said that they looked at increasing their headcount this year, compared with the 48 percent recorded in 2023. Fourteen percent of C-level decision makers said they expected to reduce headcounts, compared with the 11 percent registered last year.

Hong Kong professionals most commonly saw a three to five percent pay rise with the same employer in 2023, while those who successfully switched jobs last year gained a salary rise of 17 percent.

Although 78 percent of the respondents said they expected a salary bump this year, most respondents' expectations were modest and realistic, according to Cheng.

Among the sectors experiencing the weakest hiring sentiment were retail, financial services, as well as real estate, with the sluggish mainland economy and property downturn still creating headwinds for growth.

The innovation and technology sector, however, remained the most optimistic in terms of headcount increases, reflecting its growth momentum and prioritisation by local and national authorities, according to David Siew, partner of people services at the firm.

“Trends around artificial intelligence and other emerging technologies present this sector with strong future growth prospects,” he added.

Separately, the report noted that about three quarters of respondents said they would consider relocating within or to the Greater Bay Area due to better career and industry prospects as well as higher income.

To attract and retain talent, KPMG suggested employers strengthen flexible work arrangements as well as housing benefits in remuneration packages to staff.