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Economic Update

2021/02/19

Unemployment at Nearly 17-Year High

Hong Kong’s unemployment rate reached 7% during the November-January period, up from 6.6% in the previous three-month rolling period. The latest uptick, which is in line with the Chamber’s forecast, has brought the city’s jobless situation to a level not seen in almost 17 years.

The two tranches of the Employment Support Scheme, under which the Government paid a portion of employees’ wage bills for a six-month period up to November 2020, helped shield the economy from a sharper rise in unemployment, although the labour market remained in a far weaker position than at the start of the year.

As the scheme expired in November, which coincided with a fourth wave of Covid infections, more jobs – in particular those in the worst affected sectors – came under threat. The unemployment rate for the retail, accommodation and food services sectors rose to 11.3%, doubling from 5.2% a year earlier; and that for the construction sector increased to 11% from 5.7%.

As it is unlikely that the Government Budget, which will be unveiled on 24 February, will provide major relief, pressure on businesses and households will remain high, should the pandemic continues to pose a threat. The good news is that Hong Kong is launching a mass vaccination programme, which has the potential to be a game-changer in the battle against the virus.

Even though there is light at the end of the tunnel, it may take some time for the labour market to reabsorb the unemployed, as many businesses have expended significant financial resources just to stay afloat. In the meantime, the pandemic has accelerated digital transformation, putting low-skilled and labour-intensive jobs at risk.

Safeguarding jobs will remain a priority for policymakers in the aftermath of the pandemic.

 

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