Jake's View

Subsidies for industrial jobs a waste of money

Government plans to help industries badly affected by labour shortages and grants for university students economically unsound

PUBLISHED : Tuesday, 07 January, 2014, 1:05am
UPDATED : Tuesday, 07 January, 2014, 9:28am

The Hong Kong government has noted in its population policy the need to change the mentality of Hongkongers who place academic education before vocational training.

SCMP, January 3

Iam not a big believer in education, particularly the university sort, and thus I naturally applaud the sentiment. It has become prominent again with government plans for new subsidies of industrial employment.

But look first at the story the two charts tell us.

The proportion of degree-holding workers on our employment rolls has more than doubled since the mid-1990s to 26 per cent.

How much education does it take a flight attendant to recite "Beef or chicken, Sir?" How much scholarship is required to make a sales pitch? Yet more than a quarter of the workforce holds a university degree. The need for education at this level cannot possibly be so great.

And it is only getting worse.

As the second chart shows, the number of undergraduate students enrolled in programmes funded by the University Grants Committee suddenly rocketed up last year. The committee's budget was also raised to HK$15 billion from HK$11.7 billion two years before.

Once again we have a case of two arms of government not talking to each other.

One arm is beginning to realise the folly of condemning ever larger numbers of young people to wasted years of debt and boredom in academia. The other is still mired in the antediluvian notion of making Hong Kong an education hub.

The latest plan to fix things by subsidising wages in those industries most afflicted by labour shortages will only make things worse in the end. The idea is to be introduced by Chief Executive Leung Chun-ying in his policy address next week but, in a display of character weakness, he decided to leak it first so that he can drop it if criticism is too fierce.

Industrialists predictably like the idea. Government to pay our workers for us? Yes, bring it on, they say.

But it is a bad idea on many counts. In the first place, it is economically foolish. I thought this government had pledged itself to reducing income polarity. That means standing back when rising prosperity and full employment finally begin to push up wages for the lowest paid workers.

Subsidising their wages is a band-aid solution. It just puts off the reckoning for low wage industries that must adjust themselves to a new reality of better paid workers. That reckoning will still have to come eventually and it will only be made worse by putting it off.

The idea is also fiscal foolishness. The money for wage subsidies will have to come from taxes and the burden of taxes in the end always falls heaviest on the working poor, however circuitous the route by which it comes to land on their shoulders.

I have the better solution. Let's make a drastic chop in the budget of the University Grants Committee. Pull it back to at least HK$11.7 billion, if not single digits. There can be no better way of telling people that they are likely to waste their time in university than to tell them so with money.

But, no. Why save money when instead you can waste it in two different ways?