Hong Kong jobless rate hits nine-year high as coronavirus crisis and months of unrest take toll

Ng Kang-chung

Hong Kong’s jobless rate rose in February for a fifth straight month, hitting 3.7 per cent – the highest in more than nine years – as the city’s economy reeled from the double blow of the coronavirus epidemic after months of political unrest that had pushed it into recession.

Official figures released on Tuesday showed the unemployment rate rose 0.3 percentage points for the three months to February, from 3.4 per cent for the November-to-January period.

The underemployment rate also increased to 1.5 per cent from 1.2 per cent.

The string of increases was the longest since late 2008, in the aftermath of the global financial crisis. The latest figure was also the highest since January 2011 when the jobless rate hit 3.8 per cent.

Secretary for Labour and Welfare Dr Law Chi-kwong warned: “The labour market deteriorated sharply, as the Covid-19 epidemic caused severe disruptions to a wide range of economic activities and dampened economic sentiment.

“The labour market will be subject to even greater pressure in the near term, and the exact impact will hinge on the duration and severity of the pandemic around the world.”

Compared with the previous three-month period, the unemployment rate rose across all major economic sectors, with more distinct increases in construction (6.8 per cent), and retail, accommodation and food services (6.1 per cent).

The jobless rate in the hotel and guest house sector hit 3.7 per cent, while that for the food and beverage service sector was 7.5 per cent. It was 5.2 per cent in the retail sector.

The jobless rate has been climbing since October 2019, when it stood at 3.1 per cent.

The city’s jobless rate reached an all-time high in June 2003, at 8.5 per cent, as the city was battered by the severe acute respiratory syndrome (Sars) outbreak.

Dr Law Chi-kwong says the labour market has deteriorated sharply. Photo: Edmond So

The city has been pushed into recession with the economy dealt another blow by the coronavirus outbreak since January after being plagued by months of increasingly violent anti-government protests triggered by the now-shelved extradition bill.

Financial Secretary Paul Chan Mo-po revealed in the budget last month the city’s first deficit in 15 years, of HK$37.8 billion, for the current financial year and forecast it to surge to a record HK$139.1 billion in 2020-21.

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He also forecast that the city’s economic growth would range from minus 1.5 per cent to 0.5 per cent for 2020, following a contraction of 1.2 per cent in 2019.

Steven Chu Hon-chung, vice-chairman of the Federation of Hong Kong and Kowloon Labour Unions, urged the government to introduce an unemployment allowance and create short-term jobs.

“While jobless allowances can ease the immediate financial burden of workers, it will be more helpful if the government can boost retraining programmes so workers can brush up their skills, or create more jobs for them,” Chu said.

Hong Kong General Chamber of Small and Medium Business president Joe Chau Kwok-ming said February’s figures had not fully reflected the impact of the shutdown triggered by the Covid-19 outbreak.

“The situation this time is worse than during Sars. While Sars mainly hit the local market and companies could still do business overseas. This time, the whole world is affected,” he said.

He expected the jobless rate to continue to rise in the coming months as more companies would have to cut manpower or scale back operations to stay afloat.

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But Dah Sing Bank economist Gary Wan was less pessimistic, saying he did not expect the jobless rate to rise back to the Sars level.

“The retail sector has been hard hit since the second half of last year because of the social incidents.

How much worse can it get?” Wan said. “So far, there is no sign of any possible crash of the asset market [as happened during Sars].”

Dr Lee Shu-kam, of Shue Yan University’s department of economics and finance, said the jobless rate may be under-reported as it did not take into account “discouraged workers” – those who did not actively seek work or had given up after failing to find a job after a long time.

“They are not considered part of the workforce at all. But they still need help,” said Lee, who also argued against providing jobless allowances as a means to boost employment. “It is not protecting workers’ employment. It is protecting workers’ living after they lose their jobs. Rather, the government should consider offering allowances to companies to encourage them to recruit people.”

This article Hong Kong jobless rate hits nine-year high as coronavirus crisis and months of unrest take toll first appeared on South China Morning Post

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