April 18, 2002

A NEW TURN IN THE UNEMPLOYMENT SITUATION

The Chamber’s Chief Economist, Ian K Perkin, comments on the Hong Kong SAR’s unemployment and underemployment figures for January-March 2002.

The January-to-March unemployment numbers marked a new stage in the current cycle with the number of people losing their jobs being, for the first time, more important in the overall increase in unemployment than the number of people being added to the available workforce.

The total increase in the number of unemployed in the January-March period when compared to the December-February was 11,200, with 5,800 accounted for by a decline in the numbers employed and 5,400 by the overall increase in the labour force.

It is the first time in the recent worsening in unemployment that the loss of jobs has outweighed the increase in available labour force in the overall numbers.

This must be worrying for the SAR Government, especially with the peak of the unemployment cycle probably not having yet been reached.

As long as the rise in unemployment could be explained mostly by the increase in the available labour force, the Government was somewhat immune from criticism, as there is little it can do to stem the rise in the number of people entering the labour pool.

But with job losses now mounting and overtaking the increase in the labour force in importance there may be increasing pressure on the Government to “do something” to stem the job losses and improve the general employment outlook.

At 7 per cent of the workforce (up from 6.8 per cent just a month ago), the unemployment rate is now at a record level for the modern era of Hong Kong development.

Although the local economy may have seen already the worst of the current economic slow down it is likely to be some time before this improvement is reflected in the employment and unemployment numbers, as employment tends to lag the broader recovery.

A real improvement in the employment outlook will require evidence of a sustained economic upturn and that will have to await confirmation of the recovery that appears to have emerged in the US and global economies in the opening months of the year.

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