Hong Kong on road to recovery

PUBLISHED : Saturday, 18 July, 2009, 12:00am
UPDATED : Saturday, 18 July, 2009, 12:00am

Hong Kong is seeing positive signs of a pick-up after two consecutive quarters of economic contraction this year, with improved sentiment in the real estate and stocks markets, and unemployment at about 5 per cent.

But companies are still cautious about recruitment and are being extra selective in their talent search.

Figures from the latest South China Morning Post/admanGo survey (see graph), which tracks job vacancies advertised in six major recruitment publications in Hong Kong, revealed that although the total number of jobs posted for the second quarter decreased by 70 per cent year-on-year, it edged up 2.5 per cent at 24,094 compared with the first quarter of this year.

From a quarterly perspective, an overall increase in positions in the local job market was recorded in the second quarter in major sectors including manufacturing, telecommunications, banking, financial and investment, and professional services such as accounting and legal.

'Economic data is getting better than the market expected. The local economy may expand in quarterly terms but, in annual terms, we still have a low output and an overall annual contraction,' said Frederic Neumann, a senior economist at HSBC.

He warned, though, that potential external factors, such as high oil and commodity prices, and reduced demand in western countries might cause a drag on local consumption and affect the employment rate for the rest of the year.

'Hong Kong has seen some positive signs of an economic pick-up, [especially in] that the asset and equity market is recovering. Companies in the banking and financial services industries are looking to hire rather than fire people on the back of the improved market sentiment, and active property and equity markets,' Mr Neumann said.

Rising property prices in Hong Kong, the mainland and elsewhere in Asia were helping Hong Kong move towards long-term recovery in consumer spending, said Mr Neumann, whose analysis focuses on Asian economics.

'Increasing real estate prices should improve confidence among Hong Kong consumers, which will help create the wealth factor where people will feel better because the market is up and they will be more willing to spend and consume,' he said, adding that rising property prices would also lead to increased construction activity and refurbishment of apartments, thus leading to more job opportunities.

He said that although local consumer sentiment was heading up, unemployment was still a major challenge for Hong Kong. 'Unemployment is a lagging indicator of economic growth and companies are still reporting lower sales.'

Mr Neumann said that the unemployment situation should stabilise towards the end of the year and would come down gradually early next year.

He said the grim outlook for the economies of the US and Europe for the next couple of years, combined with contracted consumer demand, meant that Hong Kong's logistics industry and other trade-related services sectors would continue to suffer for a longer period because of reduced cargo throughput volume to these major markets.

While the global downturn might have reduced the number of high-spending overseas tourists, Mr Neumann said sustained economic growth on the mainland and rising asset prices there would probably benefit Hong Kong in the coming months.

'Hong Kong's tourism and its related industries, such as retail and hotels, should see an increase in the number of high-spending mainland tourists in the second half of the year. Their spending can help boost domestic consumption and continue to help sustain positive market sentiment,' he said.

Although companies in most business sectors were adopting a wait-and-see approach to address issues, such as business expansion and recruitment, Mr Neumann expected job opportunities in the retail and property services sectors to improve gradually on the back of the mainland's solid economic foundation.

According to the South China Morning Post/admanGo survey, sectors that saw the biggest growth in vacancies in the second quarter from the first quarter were those traditionally more resilient to economic ebbs, such as education and training (up 33 per cent), health care, pharmaceutical and medical (up 8 per cent) and non-profit organisations (up 6 per cent).

Andrea Williams, managing director of Ambition Hong Kong, said there should be no further dips in Hong Kong's economy and, with market sentiment continuing to improve, companies in the financial services industry were hiring more people at different levels, particularly for back-office operations and service support. 'There is some level of recruitment activity in finance services because companies have gone through several retrenchment exercises and recruitment is necessary because they feel that they don't have enough people to do the work now that their business is picking up,' Ms Williams said.

She said that this was a good time for companies to find opportunities to attract more qualified people.

While the priority for firms is implementing cost-cutting measures and initiatives to control staffing, talent retention is becoming increasingly important in this economic climate.

Citing the findings of a recent survey by Hudson on talent management, Mark Carriban, managing director of Hudson for Asia, said: 'Companies need to take a close look at which people should stay, reassess their talent mix, and focus on top performers and employees with high potential. Right-sizing priorities must not be at the expense of talent engagement and key talent retention.'

Still, companies across all industries and sectors in Hong Kong are cautious and are taking a longer time to make hiring decisions.

According to Eunice Ng, director at Avanza Consulting, while the market for C-suite executives has shrunk after a series of consolidation and restructuring exercises, demand for senior managers and professionals in areas such as accounting, finance, legal and engineering has been sustained throughout the year because of the integral functions they perform in their companies.

But companies are not finding it necessarily easier, despite high levels of unemployment, to secure the right people who are equipped with the specific skills they need. Lancy Chui, the company's general manager for Hong Kong and Macau operations, said employers in some independent financial institutes were having problems recruiting the right sales representatives with the necessary skills and talent.

'The sales profession requires individuals who have a strong entrepreneurial spirit, are adept at handling frustration, knowledgeable about the macroeconomy and microeconomy, and have a passion for achieving goals,' she said.

According to a recent survey by Manpower Hong Kong on the talent shortage in the Asia-Pacific, 37 per cent of Hong Kong employers interviewed expressed difficulty filling positions, such as sales representatives, technicians and engineers, that required more refined skills.