An acute labour shortage in certain sectors is hurting our competiveness and undermining Hong Kong’s economic growth. We have the necessary tools to fix this problem, but lack the will to act. That needs to change, or Hong Kong will underperform as the global economy improves.
Let’s be clear: the problem isn’t jobs, and it isn’t wages. We have little trouble generating employment in this town, and if higher wages were the answer, we wouldn’t face rapidly rising numbers of vacancies in a very wide range of industries and job categories. The problem is structural, more than cyclical, and the solutions need to be as well.
Over the past decade, our population grew by 392,000, our labour force by 311,000 and our total employment by more than 436,000. The number of job vacancies has increased by nearly 15% a year since 2002, and as of the first quarter of this year, 80,165 positions are open in the private sector. In ten years, we’ve gone from 15 people available for every job vacancy to less than two.
What changed? In 2002, we hosted 16.6 million visitors, 41.2% of whom came from other parts of China. Last year, it was 48.6 million and 71.8% from the mainland. Retail sales increased 9.7% per annum over the past decade and two-way trade 8.7% a year. No wonder we have a tight labour market!
The figures speak for themselves. In the food and beverage sector alone there are over 14,000 positions vacant, triple the level of five years ago. In social and personal services, 17,330 slots are waiting to be filled, up nearly 40% and the retail sector needs over 9,400 more workers, a 64% increase.. By position, we are short almost 28,500 service and sales workers and nearly 23,000 professional and associate professionals.
The SLS isn’t working
The main mechanism for alleviating the problem is the Supplementary Labour Scheme (SLS), which allows employers with genuine difficulties finding suitable staff to apply to import workers at the technical level or below. Safeguards ensure that priority is given to local workers, that salaries and benefits do not undermine those offered to Hong Kong residents and that low-cost housing is provided. There are no sector quotas, automatic renewals or open-ended jobs.
But, the SLS is cumbersome, slow and not meeting the legitimate needs of employers. Last year, just 84 people were approved under the SLS to enter Hong Kong for the purpose of working in the wholesale, retail, restaurant and accommodations industry. Overall, the figure was 1,942, a number equal to less than 3% of the number of jobs we need to fill.
More of our people are working, as a share of the population, than ever before. Yet, even in a modestly growing economy, we face one of the tightest labour markets in memory. And, it is going to get worse. Today, we have 3.85 million people in our labour force. According to the Government’s projections, that number will shrink to 3.55 million in 2018 and 3.39 million by 2041.
This is not the first time we’ve experienced a tight labour market, and it won’t be the last. As our economy picks up speed over the next several months, we are going to be forced to make a choice between underperforming our potential growth rate or addressing the shortages holding us back.
Employers recognize that this is a sensitive issue, but we are only hurting ourselves when we refuse to face the fact that Hong Kong doesn’t generate sufficient numbers of skilled workers to fill the jobs we have available. It is our sincere wish that labour unions and employers can come together on this issue, for the good of Hong Kong.
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