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Why base pay is such a BIG problem for banks in Hong Kong

"The biggest change in the employment market over the past six months has been the rise in basic salaries. Before you didn't negotiate on base, now you do," bemoaned one delegate at the recent eFinancialCareers roundtable in Hong Kong.

She was not alone. The 18-strong panel of senior HR professionals agreed that changes to the makeup of compensation - in which some banks have raised salaries to balance out reforms to bonuses - are helping to drive the job market and are giving them a hiring headache.

"It's making negotiations more complex. If a bank hasn't improved its base pay, savvy candidates will use this as a tactic to push for more," said one of the roundtable attendees, all of whom asked not to be named in this report.

HR is trying to educate existing employees that it's total compensation that matters when they weigh up where they stand against counterparts at other firms. "But there is an assumption that despite all these salary hikes, good bonuses will still follow in 2011. Expectations should be managed downwards."

The need to be more competitive on salaries is just one way in which the hiring landscape is heating up in Hong Kong. "Recruitment has exploded compared with six months ago, and it's not just replacement, we're seeing expansion too because banks want more of a percentage of revenue from Asia," remarked one delegate.

Counter offers are getting out of control. "We are losing candidates we thought we had secured because of outrageous title bumping and doubling of compensation at their old firm."

And banks aren't afraid to buy out notice periods either. "The business wants the person on board and three months is too long to wait. Plus there's the extra risk factor that in the current market they will take a better new offer elsewhere," commented one roundtable attendee.

Candidates in sought-after job functions, such as equities and risk, are trying to line up a few offers at a similar time - perhaps by delaying one of their final interviews - so they can go back and forth to offer-stage firms and negotiate better compensation. "On these occasions, it's up to HR to help the business, so they don't put all their eggs in one basket and have back-up candidates."

But delegates did not describe the entire employment market as candidate-lead. The bargaining power of unemployed candidates, for example, remains low, especially if they have been out of work for over a year, or didn't do further education during the downturn. "Only some job seekers are being aggressive - those who are very definite in their career choices."

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AUTHORSimon Mortlock Content Manager

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