The Hong Kong government could raise civil servants’ salaries by up to 4.12 per cent this year and plans to introduce a revamped appraisal system for its employees in October, a minister has said.

Secretary for Civil Service Ingrid Yeung said on Thursday that the tentative results of the 2026 Pay Trend Survey suggested a 4.12 per cent pay rise for senior civil servants, 2.64 per cent for middle-tier employees, and 1.17 per cent for junior staff.

The suggestions are based on findings from a survey of around 155,000 employees from 104 private companies conducted between April 2025 and April 2026. The survey’s results will be one of six factors considered by the Executive Council, the city’s top decision-making body, for a pay adjustment, Yeung said.

The other factors include “civil servants’ demand for salary adjustment and their morale,” Yeung said, adding: “I will meet with their representatives next week on these matters.”

The government resumed the pay trend survey this year following a salary freeze in 2025 amid a three-year fiscal deficit that strained public finances.

Financial Secretary Paul Chan estimated in his annual budget speech in February that the government could see a HK$2.9 billion surplus in the 2025-26 fiscal year.

Asked on Thursday whether a pay rise for civil servants would lead to a backlash in the wake of the deadly Tai Po fire, Yeung said the “vast majority” of government employees “are professional, efficient, and committed.”

“For the few underperforming civil servants, I believe the best way is to handle them through established mechanisms,” she said.

Yeung also said that under the revised appraisal system, civil servants’ performance assessments would be curved, and the bottom five to 10 per cent of staff may not receive a pay rise.

Department heads, especially those leading smaller teams or highly professional workers, may make a case to the Civil Service Bureau if they find the performance of all their staff members to be satisfactory, she added.

She promised that authorities would review the new mechanism to ensure fairness in the appraisal.

Though Hong Kong has overtaken Switzerland as the number one in cross-border wealth management, rather than enter panic mode, Swiss banks seem unruffled — feeling it bolsters the case against looming tighter banking regulations.

Hong Kong is now the world’s largest cross-border booking centre thanks to inflows from mainland China, strong initial public offering activity, and equity market gains, said a study published last week by the Boston Consulting Group (BCG).

Hong Kong had US$2.95 trillion of cross-border assets under management in 2025, while Switzerland had US$2.946 trillion.

Rapid advances in technology innovation and artificial intelligence sectors are “expected to open up greater scope for development within Hong Kong’s asset and wealth management industry”, said the semi-autonomous Chinese city’s Financial Secretary Paul Chan.

More than 60 percent of the external capital comes from mainland China, the BCG 2026 Global Wealth Report said, adding that Hong Kong was “cementing its role as China’s gateway to global markets”.

“Uncertainties around US-China tensions are the main reason they are moving capital and managing wealth in Hong Kong,” Gary Ng, senior economist at Natixis Corporate and Investment Banking, told AFP.

However, China’s market regulator announced a sweeping investigation in May against some brokers running cross-border trading, as it launched a two-year crackdown on investment leaving the mainland.

On Monday, China’s cabinet unveiled new rules due to enter force in July, aimed at curbing outbound investment and deals with foreign entities which might transfer restricted technology, services and data overseas without authorisation.

“Investors engaging in foreign investment and related activities… shall not endanger China’s national security or harm national interests,” authorities said.

Ng noted that if Beijing “truly wants to accelerate” the internationalisation of China’s yuan currency, “it will need to accept freer cross-border capital movement”.

Tougher Swiss regulations planned

The Swiss Bankers Association told AFP that Hong Kong had been directly benefiting from exceptionally strong asset growth in China.

But it said Swiss banks too had a successful presence in key Asian growth markets.

“For Switzerland, competitive framework conditions are particularly crucial for the future. It is essential that regulation remains targeted and internationally coordinated so that both stability and competitiveness are strengthened,” it said.

Switzerland’s biggest bank UBS is currently at loggerheads with the government, which wants to tighten banking regulations following the implosion of Credit Suisse in 2023.

UBS was strongarmed into a quickfire takeover of its closest domestic rival to prevent a major blow to Switzerland’s financial stability.

Bern now wants stronger safeguards, given the merged megabank’s size relative to the Swiss economy.

Hong Kong overtaking Switzerland “shows that international competitiveness must remain at the heart of the discussions,” the Association of Swiss Private Banks, which represents wealth management firms, told AFP.

During debates on the government’s proposals, “parliament will have to keep this in mind”, it added.

‘Playing half the game’

Andreas Venditti, an analyst with Swiss investment managers Vontobel, said Hong Kong’s rise to the top had been coming because growth rates were stronger in Asia.

“As Swiss banks are among the largest wealth managers in Asia — with UBS the largest in the region by very far — they clearly benefit from the higher growth rates,” he told AFP.

UBS’s assets under management in the Asia-Pacific region amounted to US$781 billion at the end of March, he noted.

Cross-border wealth grew by 10.7 percent in Hong Kong in 2025, compared to 7.6 percent in Switzerland, said BCG.

Dean Frankle, a managing director and financial institutions specialist at BCG, said Hong Kong overtaking Switzerland is primarily down to “the rise of Asia”.

For wealthy Asian clients, “why would you go to Europe” when Hong Kong is “at your doorstep”, he said, hence the importance for Swiss banks to be competitive in the Asian market.

“If you’re not serving both markets, you’re only playing half the game,” he told AFP.