Unhappy underemployed will spark wave of populism
More regulation, nationalism and protection are likely to emerge, posing challenges for markets
In the last few years, I have seen many résumés of excellent financial professionals whose careers are broken.
Until 1997, and the Asian financial crisis, most professionals did rather well in their careers. People had worthwhile jobs and were motivated, hard-working and diligent.
Since that date, exacerbated by 2003 (because of Sars) and 2008 (the global financial crisis), the career paths of financial and other professionals have become substantially less appealing for employees and employers.
CVs show one year here, two years there; often in jobs for which they were overqualified and grudgingly underpaid.
This is a global phenomenon, for the impact of technology in destroying and deskilling even very highly paid jobs has been pervasive.
Hong Kong, especially, has seen an influx of well-educated young professionals from overseas seeking fame and fortune in China. They have not necessarily been any more successful than the locals, because they have merely added supply to the revolving-door job market.
Hong Kong's unemployment rate is the envy of the world at 3.1 per cent. And yet there is something not quite right. Wage inflation should be rising fast under these conditions of full employment, but it is about 4 per cent per annum, the same as inflation.
There should be fewer CVs with broken careers and overskilled staff in low-paying jobs. Something is not right when government jobs around the world, not just in Hong Kong (though we provide a notable example), pay significantly more than those in the private sector.
There is a skill mismatch - companies cannot find the talent they want at the age they want, at the price they are willing to pay.
So while unemployment is low, our participation rate (which includes people who are taking time out and living off their savings) is also low. There are many senior professionals "starting their own businesses" or "consulting", some with more success than others. They have the skills required and are easily available but don't fit for age, personality, sex, language or (over)experience.
Employment dissatisfaction is a global phenomenon made obvious by the surge in fringe and extreme politics in Sunday's election for the European Parliament.
European elections are believed to favour extremes, as governments take the blame for the bad news of the day. Immigration, European regulations and the austerity that was imposed on the profligate countries after 2008 have given rise to raw emotion. Candidates who no self-respecting citizen would have running the country received votes.
Is it then a surprise that we have a rise in militant trade unionism in Hong Kong, mask-wearing Occupy Central protesters, or filibustering in Legco? Public outcries about building filthy incinerators near country parks are our version of the European elections. Ordinary people globally are hacked off because, no matter how hard they work, the owners of capital always seem many steps ahead.
In China, the leaders have their fingers firmly on this global movement, and that is why in recent years we have seen a reduction in corruption, a big increase in minimum wages and a correction of past mistakes. The authorities know that they must give the people what they want to avoid European-style shifts.
The next few years will see the election of new national governments in much of Europe and in the United States. This groundswell of protest of educated, underemployed, skilled people will have ramifications for national and international financial policy, which will affect markets. A great wave of change is likely to bring parties to power that will pander to populism.
We are likely to see more regulation, more nationalism and protectionism, further attacks on high earners and owners of capital, and relaxed budgets. Governments will find some way of increasing private wages at the expense of the corporate sector.
Owners of capital, who did particularly well out of quantitative easing, will foot the bill. Stock markets will find a headwind in every policy.
This is not ardent left-wing political policy but strictly business. The business of politicians is to stay in power under the influence of raw economics that inexorably moves the balance from one side to another, leaving winners and losers in its wake. Technology is allowing the people to have a voice - it is not always comfortable for the status quo.
Richard Harris has built investment businesses across Asia and is the founder of Port Shelter Investment Management in Hong Kong