December 17, 2001

The Chamber’s Chief Economist, Ian K Perkin, comments on today’s (December 17, 2001) release of the Hong Kong SAR’s unemployment and underemployment figures for September- November.

The rise in unemployment to its highest level in two years, both in terms of actual numbers out of work and as a proportion of the total workforce, will add to the level of economic uncertainty and further restrain consumer spending.

At 205,000 persons, or 5.8 per cent of the workforce, in the September-to-November period this year, unemployment is now at its worst level since October-to-December 1999 when the economy was emerging from the recession brought on by the East Asian financial meltdown.

During that economic downturn, unemployment peaked at more than 217,000 in August-to-October of 1999 (6.1 per cent of the workforce), although as a proportion of the workforce it had actually hit a high of 6.3 per cent earlier that year, in the March-to-May period.

With the local economy continuing to slow – total output declined 0.3 per cent in the September three months and its likely to fall 2.7 per cent in the current December quarter – the immediate outlook for employment is not encouraging.

The latest numbers serve to underline the urgency the SAR Government has shown in attempting to create short term jobs in a bid to alleviate the present situation.

A real improvement in the employment outlook will, however, require a reversal in the present economic outlook and that will have to await any recovery in the US and global economies, which is not expected until at least the second quarter of the coming year.

In the meantime, the unemployment numbers seem likely to get worse before they get better.

The September-to-November percentage rate of unemployment was pushed slightly higher by the reduction in the total labour force numbers to 3.43 million from 3.44 million in the previous period, but nothing can disguise the worsening in the actual numbers out of work.

The same trend is evident in the underemployment numbers which rose to 98,000 or 2.9 per cent of the labour force.

The rise in both unemployment and underemployment also underlines the wisdom of private sector employers’ call for wage restraint in a bid to preserve jobs in 2002.

For further information, contact: Ian K Perkin, Chief Economist, 2823-1242