Deel report warns mounting financial pressures on Hong Kong workforce, calls for payroll innovation

Deel has released its first-ever 2025 Hong Kong Payday Expectations Report, highlighting a growing financial crisis as rising living costs and stagnant wage cycles strain employees across industries.

The report revealed a widening disconnect between employee expectations and payroll capabilities. While employees are demanding more flexibility, transparency, and control over their earnings, payroll teams are struggling with operational pressures, outdated systems, and mounting workloads.

“This report reveals a quiet crisis unfolding in Hong Kong’s workplaces,” said Karen Ng, Regional Head of Expansion, Enterprise, North and South Asia, Deel. “Today’s employees expect the same level of customisation and speed from their workplace benefits as they do from their favourite apps…Employers who can align payroll innovation with employee financial needs won’t just retain top talent – they’ll build more engaged, productive, and financially secure teams.”

The findings painted a sobering picture of financial stress. 86% of employees said their wages are failing to keep pace with inflation, with employees in the finance sector reporting the sharpest decline in real income. More than a third of employees admitted to struggling to cover basic expenses, and two-thirds said they could only maintain their lifestyle for six months or less if they were unemployed.

Gen Z employees appear to be the most vulnerable, with nearly half able to sustain themselves for only three months without income. To bridge the gaps between paychecks, 83% of employees turned to financial tools such as credit cards (53%), buy-now-pay-later schemes (33%), and earned wage access (30%).

Traditional monthly pay cycles dominate in Hong Kong, but expectations are shifting. Nearly half of employees expressed interest in weekly or bi-weekly pay, particularly among younger employees seeking greater financial flexibility. More than half of respondents also want compensation structures that blend salary with benefits such as leave.

Earned Wage Access (EWA) is emerging as a priority, with 81% of employees indicating they would consider using it if offered by employers, particularly working parents managing family expenses. Yet despite demand, only 26% of payroll teams are investing in EWA solutions, making it the lowest priority among payroll technology investments.

Alternative forms of compensation are also gaining traction. Over half of employees said they are open to receiving part of their pay in stocks or equity, while others expressed interest in cryptocurrency, foreign currency, or employer loyalty points.

The report underscored a cultural shift around pay transparency, with 81% of employees in favour of making it an industry standard. However, financial literacy remains a challenge. More than half of employees reported a lack of clarity regarding how salaries are determined, while three-quarters experienced discomfort during salary negotiations.

Gen Z employees were most likely to report confusion around retirement planning and paycheck deductions, while older generations admitted uncertainty about integrating digital assets into compensation.

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While employee expectations are evolving rapidly, payroll teams are grappling with increased workloads, regulatory changes, and challenges in integrating technology. Following the abolition of the Mandatory Provident Fund offset in May 2025, nine in 10 payroll professionals reported increased workload, and 52% said the added pressure has led to higher stress and burnout.

60% of employees said they experienced payroll errors such as underpayment, delayed payment, or incorrect deductions within the past two years – a reflection of the mounting strain on payroll operations.

To ease the burden, 88% of payroll teams are either currently using or planning to use AI, with expectations of achieving cost savings, reducing errors, and improving system integration. However, concerns around compliance, data security, and transparency remain significant barriers to adoption.

The report concludes that payroll modernisation in Hong Kong will require both technological upgrades and stronger talent pipelines. While AI and automation promise efficiency, system integration issues and talent shortages are slowing progress. Nearly half of organisations in Hong Kong plan to expand payroll headcount over the next year, with mid-market organisations leading the charge.

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