Hong Kong’s unemployment rate has climbed to its highest level in more than 15 years, hitting 6.2 per cent, while a fresh wave of coronavirus infections could plunge the embattled economy further into recession.
The jobless rate has climbed for nine straight months as the Covid-19 pandemic takes its toll on an economy that was already in the doldrums following months of social unrest last year.
Official figures released on Monday showed the city’s jobless rate was 6.2 per cent for the three-month rolling period of April to June, compared with 5.9 per cent for March to May.
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It is now at its highest since January 2005, when the rate was 6.4 per cent.
Separately, about 18,600 unemployed people received help under the Comprehensive Social Security Assistance Scheme, an increase of 0.9 per cent compared with the previous month, according to data revealed on Monday.
New applications involving unemployment cases seeking social security were still about three times higher than a year ago, even though they fell 45.3 per cent to 1,823 in June from the April peak of 3,957.
Secretary for Labour and Welfare Law Chi-kwong stressed that the labour market continued to deteriorate for the second quarter of the year as a whole and its recovery would depend on how the global health crisis was handled.
About 10,300 more people were out of work during the period, with the number rising to 240,700. Some 7,800 more people were underemployed, with the underemployment rate increasing 0.2 percentage points to 3.7 per cent, the highest in 17 years, in the April to June period.
Analysed by sector, the unemployment rate in retail, tourism and food services edged up to 10.7 per cent between April and June, the highest since the economic fallout from the severe acute respiratory syndrome (Sars) epidemic some 17 years ago.
The unemployment rate for the food and beverage service sector hit 14.7 per cent, close to its post-Sars high.
The city entered an economic recession last autumn, after months of anti-government protests sparked by the now-withdrawn extradition bill.
The local economy was dealt another blow when the coronavirus broke out in Hong Kong in late January. In the first quarter alone, Hong Kong’s economy suffered its worst decline on record, contracting 8.9 per cent year on year.
A third wave of mostly locally transmitted coronavirus infections, which broke out in early July, could also hit the city’s economic recovery.
“The still serious [pandemic] situations in certain parts of the world, and renewed surge in local cases lately serve as a timely reminder that the economic outlook is still subject to huge uncertainties,” Law said.
As part of the government’s Employment Support Scheme, a total of HK$34.2 billion (US$4.4 billion) in wage subsidies was being dispersed in six batches between June and mid-July, covering nearly 121,500 employers and 1.47 million workers.
Hundreds of businesses, ranging from listed companies to small firms across the tourism, catering, retail, health care and other industries have benefited from the scheme, which helps employers pay 50 per cent of employees’ monthly salaries at a cap of HK$9,000 (US$1,160) per worker for six months.
Carol Ng Man-yee, chairwoman of the Confederation of Trade Unions, said the rise in the unemployment rate showed the government’s wage subsidy scheme had not worked.
“I believe that the unemployment rate will continue to rise,” said Ng, citing the worsening Covid-19 outbreak that had hammered the economy.
She urged the government to introduce an unemployment allowance scheme under which each jobless worker could receive up to HK$16,000 a month for six months.
Legislator Michael Luk Chung-hung, of the Federation of Trade Unions, echoed similar sentiments, stressing that the government should roll out extra support to sectors ravaged by the pandemic, including aviation, tourism, catering and retail.
Luk also suggested the government offer short-term posts, such as data analyst, courier and administrative health worker jobs, that could help in the fight against the coronavirus.
The balance of risks to Hong Kong’s long-term economic prospects is tilted to the downside
Shaun Roache, S&P Global
Meanwhile, S&P Global Ratings warned that Hong Kong’s competitive advantage was eroding, which would potentially cause economic growth to fall to 1.1 per cent in 2030 from 2.7 per cent in 2018.
A report by the credit rating agency said the city’s ability to attract investment and talent from around the world could be faltering as a result of policy uncertainty, social unrest, and rising competition from the Greater Bay Area.
“The balance of risks to Hong Kong’s long-term economic prospects is tilted to the downside. Prominent among them is a further rapid deterioration in the US-China relationship resulting in a decoupling of the US dollar and Chinese renminbi financial systems,” said S&P Global Ratings Asia-Pacific chief economist Shaun Roache.
“A second risk is an accelerated financial opening of the mainland that would lessen Hong Kong’s role as a conduit.”
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This article Coronavirus: Hong Kong unemployment rate rises to 6.2 per cent, highest in more than 15 years first appeared on South China Morning Post