The unemployment rate became a hot topic in the past few months when it rose to
3.5 per cent, a recent high for almost 10 years. The jobless rate was higher than the 3.2 per
cent unemployment rate recorded in the May to July period. The underemployment rate in
the June to August period rose to 2.
5 per cent from 2.3 per cent in the May to July period.
Until recently, most workers who lost their jobs were from the manufacturing sector. They
were middle-aged factory workers with few skills and little education. But in recent months
a large number of employees have been laid off in the retail and restaurant businesses.
Unemployment has spilled over to the service sector from manufacturing sector.
Kong is facing a prolonged economic downturn.
The high unemployment rate has raised many social and economic problems. For
example, the number of people who commit suicide is increased. It is because more people
had lost their jobs for a long time. It is a serious threat to the lives of the poor. The
unemployed people may also feel that it is unmeaningful to live.
As a result, they will
commit suicide to solve the problem. Moreover, the high unemployment rate results in the
increase of the rate of crime. There was an unemployed man who stole rice because he was
too hungry and he did not have money to even buy food! We can know how serious the
unemployment rate is.
By the way, higher unemployment rate causes lower purchasing power of people. A
lot of kinds of business are affected. Many people lose confidence in economics of Hong
They do not believe unemployment will be improved. Some say that the Government
should provide immediate assistance for the jobless. Some also say unemployment is due to
the attraction of cheap labor across the border. The Government can no longer play the role
of a bystander.
All of these above show the influence of the unemployment. In spite of how many
people who have talked about the topic of unemployment, everyone will be concerned
about this topic.
The following sections will analyze this hot topic.
Reasons for unemployment in Hong Kong
1. Faster growth in total labor supply relative to that of total employment
In 1993 and 1994, the increase in Hong Kong labor force is 2.9% and 3.5%
respectively. At the end of 1993, the total labour supply is 2 970 000.
Change in the total
labour supply is determined by the population growth, total employment and the emigration
condition. If the population growth and the total employment is stable, the extra labour
supply will increase the total labour supply. This extra labour supply are mostly from the
influx of illegal immigrants from China, imported labour ( 30,000 ), hiring of expatriates
( net increase is 40,000 from 1992 to 1994 ) and the returnees from overseas. Thus, the
supply of labour is greater than the demand and gives pressure on employment. From March
to May of 1995, the total labour supply had risen 4.4% but the total employment had just
6%, so this aggravated the unemployment rate. However, this is just a
superficial reason. The following reasons can explain the reason of unemployment in a
2. Change in the economic structure
The economic structure in Hong Kong has changed from labour intensive to high
technology and large capital intensive. Also, it changes from manufacturing oriented to
service oriented industries.
Therefore, the manufacturing factories move to China for cheap
labour. From 1988 to 1994, there are 60,000 jobs lost each year. Of the total employment of
different sectors, the portion of the manufacturing industries drops from 27.4% in 1990 to
17% in 1994. Many labour are released from the manufacturing industries. Though there are
a great demand of labour in the service sector, many of the unemployed still cannot find
their job because of job matching problem.
They do not have the skills demanded in the job
market, so there are both a lot of vacancies of jobs and a lot of unemployed labour. This kind
of unemployment is called the structural unemployment which is a kind of involuntary
3. China .