Hong Kong’s jobless rate could hit a record high at the end of this year if its struggling economy does not improve and relief measures are discontinued, analysts have warned.
Experts on Wednesday predicted that within two months at the earliest, the unemployment rate could surpass the record of 8.5 per cent set between April and June in 2003, when the severe acute respiratory syndrome (Sars) broke out in the city.
According to results of a report, the projected pay rise for workers next year would be less than 2 per cent. The survey was based on data collected before industries were hit hard by tough social-distancing measures brought about by the third wave of Covid-19 infections in July.
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Presenting the study on the pay and benefits of workers in Hong Kong and neighbouring cities, Felix Yip Wai-kwong, associate director at Baptist University’s (HKBU) Centre for Human Resources Strategy and Development, said some types of jobs might no longer exist in the city amid the pandemic.
We forecast the unemployment rate will continue to rise … I feel it will be higher than what was recorded during Sars
Felix Yip, associate director, Centre for Human Resources Strategy and Development, Baptist University
“The [government’s] Employment Support Scheme can address urgent problems. But I don’t believe it will have a third phase.” Yip said. “We forecast the unemployment rate will continue to rise … I feel it will be higher than what was recorded during Sars.”
He added that the dire scene could play out by the end of the year, if economic conditions did not improve.
The academic was referring to the HK$81 billion (US$10.3 billion) wage subsidies offered by the government, which helped employers cover part of their payrolls between June and November.
Last month, Chief Secretary Matthew Cheung Kin-chung said two tranches of wage subsidies under the Employment Support Scheme had already stretched government coffers and officials had no plans to extend the costly relief measure.
Authorities on October 20 announced that the city’s unemployment rate had jumped to 6.4 per cent between July and September, from 6.1 per cent between June and August, a near 16-year high.
Unemployment in the retail, accommodation and food services sectors was 11.7 per cent – the highest since the Sars outbreak.
Last Wednesday, Hong Kong’s flagship airline Cathay Pacific revealed details on the city’s biggest mass lay-offs in three decades and axed 5,300 jobs locally.
The head of a coalition of Hong Kong’s largest travel agents estimated between 6,000 and 8,000 employees in the tourism sector could lose their jobs within a month if the government did not provide more support.
Noting that the latest general unemployment rate had not taken the Cathay lay-off into account, Iris Pang, ING Bank Greater China economist, said many businesses would not be able to cover their existing costs if the government did not extend the wage subsidy scheme.
She said social-distancing measures and fears about the pandemic would also dampen consumer sentiment.
“The unemployment problem has not peaked yet,” Pang said, warning that the jobless rate might hit a high of around 10 per cent at the end of this year or early 2021 if there were no other relief measures, such as another phase of government relief or further rental concessions.
Carol Ng Man-yee, chairwoman of the Confederation of Trade Unions felt the jobless rate would reach 7 per cent at the least.
“But will it surpass what was recorded during Sars? There’s a chance. It’s no surprise if it is similar to the previous figure,” Ng said, urging authorities to provide more allowances for the jobless.
She said the wage subsidies, which required employers to keep jobs, delayed rounds of firing, adding that the current scene did not reflect the actual impact of tough social-distancing measures.
Sunflower Travel, one of the city’s largest tourism agencies, on Tuesday proposed to furlough all its staff from December as the government no longer offered wage subsidies from that month. The firm said it would not be able to afford its huge expenses on rent and payrolls, the Travel Industry Council confirmed on Wednesday.
The first phase of Sunflower’s furlough scheme will last for three months until February 28 next year, and the company will later decide whether to continue the programme for another three months till May. Staff members will have to indicate if they agree with the proposal by Thursday noon.
Meanwhile, in the survey report co-launched by Yip, researchers predicted that salary increases across the Greater Bay Area next year would range from 1.1 per cent to 8.8 per cent. For Hong Kong, the range was 1.7 to 1.8 per cent, far short of the 5.1 to 6 per cent projected for Guangzhou, and 5.5 to 6.8 per cent for Shenzhen.
The bay area scheme aims to link Hong Kong, Macau, Guangzhou, Shenzhen, Zhuhai, Foshan, Zhongshan, Dongguan, Huizhou, Jiangmen and Zhaoqing into an integrated economic and business hub.
The study was conducted jointly by four institutions – the HKBU centre, South China University of Technology’s Research Centre for Human Resources Management, Hong Kong People Management Association, and Talent Development and Management Association of Guangdong. It surveyed 253 organisations covering more than 140,000 workers in the bay area except for Zhaoqing, where researchers could not secure enough responses for analysis.
The team collected the data between July last year and June this year, reflecting some of the impact of last year’s anti-government protests and the Covid-19 crisis on local businesses and employees.
But the survey results showed the starting salary of Hong Kong university graduates was higher on average than their counterparts in other cities in the region.
Ray Leung Wa-kai, vice-president at the Hong Kong People Management Association, said while the city’s career development opportunities looked attractive to many young people from mainland China, there were also chances for locals across the border, such as a faster promotion route.
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