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  • Dec 25, 2014
  • Updated: 11:40pm
Jake's View
PUBLISHED : Sunday, 25 August, 2013, 12:00am
UPDATED : Sunday, 25 August, 2013, 5:24am

Greed, not need, drives call for more foreign workers

One of Hong Kong's most influential business groups is working on a proposal calling on the government to allow an influx of foreign workers - warning that it is the only way to solve the city's labour shortage.

South China Morning Post
August 21

For starters, I have a slight quibble with the General Chamber of Commerce's numbers on unfilled job vacancies, the reason it is now calling for the doors to be opened to labour migrants.

According to chief executive Shirley Yuen, there were up to 110,000 vacancies last month. The government, however, has only published vacancy figures up to March and the figure then was 76,000.

The red upwards spike on the right of the chart shows what would have had to happen to make both numbers correct. It seems unlikely to me.

It seems all the more unlikely given that the labour force rose by 30,000 people over these four months. The participation rate has surged recently.

But I think this question is best approached from a different angle. I went to see my optometrist in Melbourne House the other day and on the ground-floor lift lobby observed three men employed to stand by the lifts all day long and motion people in.

Here is my question: How does it happen that one of the world's wealthier economies - with a gross domestic product of US$38,000 per capita, about the level of the Britain's - makes such poor use of its working people?

I have never seen this sort of thing in Britain. I have, however, seen plenty of examples of it in Hong Kong. It is what I expect to see in a basket-case economy. Why does it still happen here?

I shall answer that question for you. It is because until recently, our government regularly fell over when it was pushed by employers to keep wages down by bringing in more labour migrants.

I think it is finally becoming apparent to our bureaucrats that this is the wrong way to go, that it brings ever widening income polarity to our society, that it acts as a disincentive to acquiring job skills and that it slows down our economy's progress to a higher level.

Yes, we always need to bring in certain skills, but when it means that we look to Sri Lanka first for construction crews and the Philippines for shop clerks, then perhaps we are taking things too far. What is wrong with Hong Kong's own people?

What is wrong, say employers, is that they want too much money and there are not enough of them. What is more, they won't take dirty jobs unless they are paid even more.

Exactly, and just what is wrong with that? If Hongkongers have worked to make themselves rich, why shouldn't they enjoy their riches? Why must they dilute their own incomes to suit the convenience of their employers?

I am sure it is true that wages will rise rapidly if we restrict entry to labour migrants. I think it is a good thing.

I am also sure that some businesses will find conditions too tight and shut down. That is the cost of adjustment to an equitable and wealthy society. The nature of work will change. Progress is not painless.

I do not believe, however, that rising wages will lead to widespread job losses. Labour operates in a labour market. There has always been a very close inverse relationship in Hong Kong between wage increases and unemployment.

But most of all, it is just being fair to the people of our city. Those lift attendants in Melbourne House deserve better.



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Hk already imports alot of foreign labours from everywhere. Domestic helpers and Expats from US, Europe and Asia. You are just against Mainlanders because they are Mainlanders.
Slow down infrastructure projects is the key for labour shortage? what a nonsense. Without modern infrastructure and well planned mantainance HK will down for sure. Also the need of more housing is obvious as only with more supply you can get prices for real estates down.
Importation of labor anywhere is not the solution, mainland or otherwise. With higher wages (such as 40k a month), some real estate agents just might go into construction.
It is refreshing to, for once, hear Mr van der Kamp argue in favour of a enormous government-orchestrated market distortion: immigration controls that prevent the free movement of labour across borders. Perhaps he is coming closer to understand that free markets aren't all good, and government isn't all bad.
Well written, Jake. My sentiments exactly.

Raising wages will naturally increase labor supply. Those who attempt to claim otherwise are either being disingenuous or are downright incompetent. Importation of foreign labor, be they domestic helpers, construction workers, or various other workers, only serves to distort the local labor market in favor of employers. Seeing as employees outnumber employers, this distortion is detrimental to the public interest.
The truth of zero sum. I've always looked at our problems this way. Paper money has made the mirgation quite easy. But the electronic money makes it even easier with all the consequences the world has to bear. All in your pocket and not mine.
There is also the fact that wealth is being transferred abroad.
silly comment ..free markets do not exist and libertarians do not look to "free markets" rather they focus on a lack of "coercion." So if you have a first world health service, or education funded by residents' taxes you advocate completely free movement ...grow up
No. Inverse relationship between wages and unemployment. Unemployment down => wages up. A relative scarcity of labour supply compared to its demand (indicated by falling unemployment and rising job vacancies) will lead to upward pressure on the price of labour.
Wages are the price of labour. Price, in any market, is a function of supply and demand.

So lower unemployment (decrease in the available supply of labour relative to demand, or an increase in such demand relative to its supply) leads to higher wages, not the other way around as you propose.

Now yes, there are secondary inverse relations at work too but those depend on exogenous factors. One interesting one for example, is how lower wages sometimes do lower unemployment. This is not an endogenous relation though, and instead has everything to do with opportunity costs. If wages go down, some people who were previously happy to be working, may decide that it is just not worth it for those lower wages. They may prefer to spend more time with their kids or anything else. And vice versa, so there we have wages up => unemployment up.

Anyway, the main point of the column is indeed something else: that Hong Kong's policy of keeping wages low, by (amongst other things) importing labour, is not necessarily a good thing when we think about productivity and everything that enhances productivity. Less increases in productivity mean less added-value per head of the population, and hence lower incomes (GNP) in one way or another.

I think there is a tale here somewhere about inflation (labour input costs are vital there) and how low wages have been one way for HK to combat price pressures, for lack of an independent interest rate policy. But that is a different story.




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