Coronavirus: with higher unemployment figures on the horizon, Hong Kong businesses are bracing for a gloomy start to 2021

Cannix Yau
·7-min read

Unemployment in Hong Kong is poised to hit new highs amid the ravages of the coronavirus pandemic, with various industry leaders predicting a gloomier economic outlook for the year and the city’s catering sector bracing for its jobless rate to reach as high as 18 per cent.

Monday’s bleak forecasts came a day after Financial Secretary Paul Chan Mo-po warned that the unemployment rate between October and December last year would surpass the current 16-year-high of 6.3 per cent – representing nearly 260,000 people out of work – when fourth-quarter data was published on Tuesday. The highest jobless rate yet recorded in the city was 7.9 per cent in 2003.

Referring to an increase in bankruptcies and company closures, Chan said battling Covid-19 for nearly a year had taken a huge toll on businesses, which had been repeatedly made to shut their doors or reduce operating hours to guard against infections.

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Financial Secretary Paul Chan meets the press on Monday to discuss efforts to boost consumption. Photo: May Tse
Financial Secretary Paul Chan meets the press on Monday to discuss efforts to boost consumption. Photo: May Tse

“I am worried that in February the jobless rate for the dining sector will shoot up drastically, as at present about 3,000 out of over 16,000 eateries are on the brink of closure,” warned Simon Wong Ka-wo, president of the Hong Kong Federation of Restaurants and Related Trades.

“If there is no more relief funding from the government to rescue the economy, the catering industry will go from bad to worse. In March, I am afraid that the industry’s unemployment rate may hit as high as 18 per cent.”

For the three-month period ending November, the food and beverage sector was indeed the hardest hit, with a jobless rate of 13.1 per cent. It was followed by the construction industry, at 10.9 per cent; the hotel sector, at 8.8 per cent; the arts, entertainment and recreation industry, at 8.7 per cent; and the retail sector, at 7.8 per cent.

New jobless high for Hong Kong, but minister warns worse may be in store

Hong Kong has suffered four distinct waves of infections since the first Covid-19 cases hit the city in January last year, prompting health officials to force the closure of thousands of businesses – including gyms, bars, cinemas and beauty salons – for a total of 100 days and counting to curtail the spread of the virus.

Other businesses, such as restaurants, have been subject to stringent social-distancing rules, such as a cap on the number of people allowed at a single table, and a ban on dine-in service after 6pm.

While the government has rolled out more than HK$310 billion (US$40 billion) in Covid-19 relief, the Post has found that some businesses are still waiting for their second and third rounds of aid, announced last April and September, respectively.

The outlook for the year’s second quarter, Wong said, would depend on the effectiveness of the city’s vaccination drive, and whether the government would relax the social-distancing measures.

“For the industry, we prefer the government to roll out some compulsory measures – such as universal testing for the virus, and installation of a contact-tracing app to contain the spread of the virus – instead of asking the city’s businesses to bear the brunt of the responsibility. Those who are under the closure orders are really devastated,” he said.

Industries almost across the board are predicting higher unemployment in the first quarter of 2021. Photo: Nora Tam
Industries almost across the board are predicting higher unemployment in the first quarter of 2021. Photo: Nora Tam

Liberal Party lawmaker Shiu Ka-fai, who represents the retail sector, was also pessimistic about his industry’s prospects, saying the jobless rate in the sector could soar as high as 14 per cent in February.

“Since the last round of the wage subsidy scheme finished in November, given the impact of the continued closure of various entertainment premises and the stringent isolation rules, I think the jobless rate may hit 13 per cent to 14 per cent,” he said.

He also took a dim view of the second quarter.

“Even if the city’s people are vaccinated, it takes time for the city to achieve herd immunity. I don’t think the city’s border-crossing restrictions will be easily relaxed,” he said.

Tourism lawmaker Yiu Si-wing said unemployment in the hotel sector would likely rise to 10 per cent, as a year without visitors had seen business plunge by up to 80 per cent. “As for the second quarter, unless the government can open up more border crossings and ease the quarantine rules, the hotel sector would continue to suffer,” he said.

Even the city’s film industry was likely to be worse off, as the pandemic had dampened investors’ interest in rolling out new projects, according to Tenky Tin Kai-man, chairman of the Federation of Hong Kong Filmmakers.

“With the pandemic getting serious, the government has tended to impose immediate stringent measures, such as closure orders for cinemas without any warning. These have caught the industry players off guard and put off investors,” he said.

People file pass a job notice board in Kwun Tong on Monday. Photo: Dickson Lee
People file pass a job notice board in Kwun Tong on Monday. Photo: Dickson Lee

Tin said the jobless rate in the arts, entertainment and recreation industry could climb to more than 10 per cent as investors waited to see how the situation developed before committing to any projects, he added.

Allan Chan Sau-kit, president of the Hong Kong Construction Association, said the jobless situation in his industry would likely remain the same as last year, as some companies might slow down the roll-out of new developments to avoid the impact of Covid-19.

“For this year, the good thing is that without the opposition in the Legislative Council, there is no more filibustering, and many government projects have been approved very quickly. However, some construction sites have been closed from time to time for having some confirmed infections,” he said.

Veteran chef Michael Tang, 59, became jobless last March when his Chinese restaurant – where he had earned about HK$22,000 (US$2,840) a month – closed down after a run of bad business.

He had tried knocking on the doors of many restaurants since then looking for work, but to no avail.

To make ends meet, Tang tried out other lines of work, including doing odd jobs at construction sites and container terminals.

“In order to survive, I don’t mind doing odd jobs in these places. I even took some foundation courses and obtained the required certificates to work in these places,” he said.

Still, his earnings have suffered dramatically. Tang now works about three days a week doing logistics work in container terminals, only taking home about HK$4,000 per month.

Despite the loss of a stable job, Tang said he did not contemplate applying for social welfare, as he never gave up on finding something better.

“Actually, I am planning to take more courses, such as a licensing course for being a security officer and advanced courses for handling some difficult work procedures at construction sites,” he said. “I hope to better equip myself so I can find better-paying jobs.”

For some, lay-offs have required a change in career paths, for better and for worse. Photo: Winson Wong
For some, lay-offs have required a change in career paths, for better and for worse. Photo: Winson Wong

For some, such as former flight attendant Lena Lo, 31, being laid off may have a silver lining – in her case, by pushing her to explore a new career as a yoga instructor.

In October, Lo lost her job of 10 years as a flight attendant for Cathay Dragon when the regional carrier was axed and thousands of jobs were cut as part of a massive restructuring by its parent company, Cathay Pacific.

But Lo said she did not panic, as she had already begun paving the way for a career change. After taking up yoga in 2015 as a way to relieve stress, Lo went on to qualify as a licensed instructor two years ago, allowing her to conduct private and group classes.

“After the lay-off, I decided to try to work as a yoga instructor. It seems my ex-company helped me to make up my mind about my new career,” she said.

After earning about HK$20,000 a month as a flight attendant, Lo said she was now able to make about HK$15,000 a month teaching yoga when social-distancing rules still allowed group classes.

“Now I feel that I have more freedom and flexible time to develop my career,” Lo said, noting she was “very lucky” to have had the opportunity. “I hope my experience could encourage more people to keep their options open.”

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