Employers shift to 'smarter spending' to address rising costs
Rising costs are prompting organisations in Hong Kong to focus on smarter spending when it comes to their benefits strategy, according to a new report.
WTW's 2025 Benefits Trends Survey revealed that rising benefit costs emerged as the top issue influencing benefit strategy for organisations, with 81% of organisations citing it.
It surpassed competition for talent for number one, which has been cited by 65% of Hong Kong employers, according to the report.
"Budget constraints, talent issues, and the uncertainty on potential impact of tariffs show no signs of easing soon," said Eric Lam, Head of Health & Benefits, Hong Kong and Macau, WTW, in a statement.
"Employers are evaluating how to mitigate these challenges through their existing employees' benefit programmes."
Implementing health benefits emerged as a significant challenge for employers, according to the report, as estimates show that the cost of medical care is projected to increase by 9.8% this year.
Other benefit areas where employers face the greatest challenge in implementation include:
Despite this challenge, health benefits remained the top priority for 65% of organisations, followed by mental health (56%).
Lam said organisations are now focusing on "smarter spending" as well as finding innovative solutions to deliver the right benefits strategy to employees.
"These can include reshaping benefits or even targeting support and spending on the benefits that matter most, enabling personalisation and helping employees make better decisions," he added.
Over the next three years, more than half of employers plan to reallocate or rebalance spending (58%), as well as enhance value or switch to better-value vendors across health, retirement, and risk benefits (61%).
More than half also said they plan to ask their benefits teams to be more focused on total rewards (63%). They also plan to use cost forecasting and risk analytics over the next three years (57%).
"There is still a long way to go to address these pressure points but helping employees to make the best of their benefits through greater choice and support is what matters most to them," Lam said. "This can significantly enhance employee experience and give companies an edge in the competition for talent."
