A survey has found that pay rises in Hong Kong slowed to 2.7 percent on average in the first three quarters of this year, down by 0.5 percentage points compared to the same period last year, as businesses became more prudent regarding operations amid a fast-changing geopolitical situation.

The study, conducted by the Hong Kong Institute of Human Resource Management, also projected that salaries in the SAR could rise by an average of 3.5 percent next year, although the majority of employers had yet to make a decision on whether to increase wages.

The survey covered about 142,200 full-time employees from 167 companies in Hong Kong, spanning 12 business sectors.

The institute's immediate past president and executive council member, Lawrence Hung, said the 2.7 percent pay hike was a "relatively low level since the Covid pandemic".

"I believe that in 2024, because of the shortage of manpower, everyone was increasing wages to attract or compete for talent," he said.

"But this year, in 2025, everyone knows there might be volatilities in the economy, considering the international climate and geopolitics.

"So under such uncertainties, enterprises must strike a balance between managing operations while handling human resources and talent retention.

"And therefore cost control will be taken into their considerations."

Factoring in inflation, which stood at 1.5 percent between January and August, the institute said the real base pay adjustment was only about 1.2 percent during the period.

The sectors that saw the largest pay rises were logistics and transportation, where salaries rose by 4 percent year on year on average, partially boosted by the effects of "front-loading" as manufacturers and exporters rushed to send shipments out before higher tariffs came into effect, while aviation capacity also further enhanced pay rises in the sector.

Banking and financial services, as well as accounting and professional services, saw pay increases of between 3.6 percent and 3.5 percent, respectively, while retail and catering were among the sectors with the lowest rises.

Looking ahead, Hung said he is "cautiously optimistic" about pay rises next year, as the SAR's economy continues to improve amid a stock market boom, a tourism revival and a stabilising property market.

"I don't have a crystal ball, but Hong Kong's economy is improving," he said.

"And if you take a look at the Golden Week, the National Day holidays, there were more tourists visiting Hong Kong, and their consumption has increased," he said.

"Economic competition among countries is actually very changeable, and policies between today and tomorrow can be different.

"So we can only focus on how the city's economy is. And you can see that the renminbi is still very stable, which is beneficial for Hong Kong," he added.

Of the companies surveyed, 11.4 percent did not raise salaries this year, but Hung said there was "no direct correlation" with the government's move to freeze salaries for civil servants.

The survey also found that 68 percent of firms have not yet decided if they will increase pay next year, with many adopting a "wait-and-see" approach. Around 30 percent plan increases, while 2 percent plan pay cuts.

The institute also said the average salary increase in Macau this year stood at 2.3 percent, while a survey by CIIC Management Consulting showed pay levels in the Greater Bay Area rising by 4.1 percent.