Hong Kong’s jobless rate is set to surge to a nine-year high because of the dim global economic outlook triggered by the coronavirus pandemic, with the catering, retail, hotel and construction sectors bearing the brunt, the city’s financial secretary has warned.
Paul Chan Mo-po also urged the opposition parties to stop filibustering and pass the government’s economy-boosting measures in the legislature without delay.
Chan sounded the warning on his official blog on Sunday, with the authorities to announce the latest jobless rate on Tuesday.
“The global economic volatility has exerted further pressure on the Hong Kong economy,” Chan wrote. “It can be expected that the unemployment rate will deteriorate more rapidly. The hard-hit sectors will be catering, retail, hotels and construction.”
He said many of the businesses had scaled back or suspended operations, or asked staff to take no-pay leave.
“While these will push up unemployment and underemployment rates, employees’ incomes will also shrink and in turn exert greater pressure on the job market,” Chan said.
“The latest unemployment rate to be announced this week will climb to about a nine-year high.”
Chan did not give a specific figure.
Hong Kong’s jobless rate rose to 3.4 per cent in January, the highest in more than three years. The rate for the same month nine years ago was 3.8 per cent. It fell gradually to 3.5 per cent in July 2011 and 3.3 per cent in December that year.
The unemployment rate reached an all-time high of 8.5 per cent in June 2003, as Hong Kong was battered by the severe acute respiratory syndrome outbreak.
Chan added that one of the ways to boost the economy and employment was to increase public spending and he said the government had a series of infrastructure projects ready for launch once the legislature approved funding requests.
He cited as an example the Legislative Council’s recent passage of a HK$22.3 billion (US$2.86 billion) Capital Works Reserve Fund, which cleared the way for the launch of 10,000 minor projects, involving 17,000 workers.
But Chan noted: “Because of filibustering in the legislature, so far some 37 projects that had already been approved by the public works subcommittee are still waiting to be cleared by the Finance Committee. These projects involve about HK$50.1 billion and 7,700 jobs.
“If they can be passed by the legislature as early as possible, it can ease the unemployment pressure and also spur other sectors in the economy to [growth].”
Hong Kong has been pushed into recession with the economy dealt a blow by the coronavirus outbreak since January after months of social unrest.
Chan, who delivered the budget last month, reported the city’s first deficit in 15 years, of HK$37.8 billion, and forecast it to surge to a record HK$139.1 billion in the 2020-21 financial year.
He also forecast that the Hong Kong economy would grow by minus 1.5 per cent to 0.5 per cent in 2020, following a contraction of 1.2 per cent in 2019.
For the four financial years beginning in 2021-22, there would be an overall deficit of between HK$7.4 billion and HK$17 billion in the consolidated account.
In the RTHK programme Letter to Hong Kong on Sunday, Chan, however, dismissed fears that Hong Kong had entered a period of structural deficits, saying the figures forecast were “not a big sum in the context of an expenditure budget of some HK$700 billion”.
As for future spending, Chan said the administration would be more mindful of the government’s long-term affordability. Any increase in spending should also be in line with an increase in revenue.
Professor Terence Chong Tai-leung, executive director of Chinese University’s Lau Chor Tak Institute of Global Economics and Finance, said: “I would not be too surprised if the latest jobless rate edges close to 4 per cent. Big improvements might not be seen until after the Covid-19 outbreak is over.
“The government should encourage people to resume normal daily life. If you ask people not to do this and that and stay at home, there will not be economic activity and no services will be needed.”
Meanwhile, legislator Michael Luk Chung-hung, of the Federation of Trade Unions, urged the government to introduce an unemployment allowance scheme and create temporary jobs as well as offer more retraining programmes.
Statism needs war; a free country does not. Statism survives by looting; a free country survives by producing.