Monitor
THIS COLUMN has consistently argued that unemployment in Hong Kong is not as bad as it may seem, that the number of people employed is holding up quite well against a slowing economy and that most of the rising unemployment rate is attributable to a swiftly growing labour force rather than job losses. I still say it is true.
But there is no denying a 7 per cent jobless rate is a high figure and a matter for concern. As the first chart shows, it is the highest rate we have suffered for all data on record. So how does a perennial optimist who is forced into retreat by hard data fight a rearguard action for his optimism? By turning from the top story on the front page of Friday's issue of this newspaper, in which the latest unemployment rate was reported, to the top story on the front page of the business section. This was headlined 'Growth forecast edges up'.
It said the International Monetary Fund had raised its growth forecast for our gross domestic product to 1.5 per cent this year and 3.6 per cent next year in light of indications that the United States economy is recovering. It also noted that the Asian Development Bank forecasts 2.1 per cent growth for us this year and 4.8 per cent in 2003.
Now look at the second chart. It is a little difficult to untangle the blue line from the red line, which is just the point. The year-on-year growth rate of employment in Hong Kong bears a very close resemblance to the growth rate of our economy, as you would expect. The only particular feature you should note is that over the past five years the peaks and troughs of growth in employment have tended to lag GDP growth by an average of about six months.
Put this with the IMF forecast and you have grounds for another forecast that says employment growth in Hong Kong should pick up by about the third quarter. It could be longer if the lag with GDP growth proves longer this time, but if the IMF forecast is right our GDP growth rate should be up again by at least the second quarter.
Granted, this is a forecast for employment numbers, not the unemployment rate. Employment numbers could rise and the jobless still soar higher. All it will take is higher growth in the labour force than in net job creation, and there is certainly reason to think it may happen.
We have 245,000 more people in the labour force than we did five years ago before the onset of the Asian financial crisis and the latest figures show labour force growth again rising to 1.67 per cent year over year. But I think there is reason for the optimist cause to keep its hopes up.
Graphic: jake22gbz
