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  • Aug 1, 2014
  • Updated: 9:49pm
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.

jake.vanderkamp@scmp.com

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HK-Explorer
If Hong Kong does not import construction workers then high speed rail, MTR expansion, new roads will be slow and extremely expensive. This will move onto property as well. Salaries will double which means private housing will become prohibitively expensive and public housing will drain public coffers.
Also it is a well known fact that the most expensive per square foot builds of housing is public housing. Per square foot it costs more.
This is because developers are very very good at keeping costs down, maximizing space and negotiation bulk purchases. The housing society due to burrocracy, overpayments, tendering rules and approved vendors is extremely expensive and is not value for money.
The one I hear the most quoted is government elevators cost double private ones due to tendering. But it is government $ so no one questions it.
Giwaffe
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.
John Adams
I must be missing something, and no I'm not being sarcastic.
So I hope that Mr van der Kamp can clarify in a follow-up article.
.
My question is this : why do we have 18% of our population below the poverty line and yet we still need to import labor ? If we import low cost labor (which is what I assume the HKGGC wants) where will they live and how will they be able to afford to live here unless their acceptable standard of accommodation and daily cost of living is even lower than the poverty line?
.
Also there's several hundred thousand mainlanders who are now living in HK legally (mostly by marriage, although there are other legal means as well) who have not yet been granted a HK ID card and therefore cannot work here, so they either don't work or else they moonlight. Why not accelerate the issuance of HK ID cards to Chinese people who are here already?
.
What am I missing ? Is the nasty fact that only imported labor will accept the really nasty back-breaking jobs like working on construction sites or digging up roads?
.
BTW: It's not necessary to have a HK permanent ID card to work here. Just a temporary ID card is sufficient, especially if it is issued freely without the prior requirement of proven employment.
Camel
The 18% of the population who are living below the poverty line, I doubt that they can do or are qualified to do the jobs most employers want to fill. You mean the low end and "dirty" jobs, but those jobs nobody want to do. Even the ones who are living below poverty line.
What I am experiencing with our company is, that quality and well trained staff still needs to be imported.
For one, reason, the local market does not offer or have enough the candidates we need and fitting into the profile. Then local HKnese staff, tend to job jumping. Most of the time for only 1000HKD more at another company.
For the construction industry, you need defin. to get foreign labour as it is very hard to find HK people who wants to do this kind of job even with higher payment. This kind of job is regarded as exhausting, harmfull to your health and life shortening.
Married Mainland Chinese are on Dependant Visa and should be allowed to work in HK. I think you are wrong informed.
Giwaffe
I am quite certain if the wage was high enough there would be adequate workers in the construction industry. Concurrently, if construction jobs are "exhausting, harmful to health, and life shortening", then they probably need to be redesigned. I do not believe construction jobs in Sweden would be "exhausting, harmful to health, and life shortening".
megafun
importation of mainland labour is NOT our solution, as this has happen in Macau, where alot of local jobs had already gone to imported labour. It creates alot of problems.
In construction, we ought to listen to sensible advice, and slow down our infrastructure projects and increase our public housing, which uses precast units - made on the mainland. Local architects and developers are still sticking to old construction, using timber formwork and non-standard designs. Do we really need all those new designs? or do we merely have them so that the over-paid architects / other profesionals can rip off the society.
Camel
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.
Giwaffe
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.
goncalo
"The comfort of the rich depends upon an abundant supply of the poor" (Voltaire)
johnyuan
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.
don67
I agree with Jake. By allowing foreign workers to take jobs which could have been filled by local workers is effectively a transfer of wealth from local workers to employers in the form of lower wages.
Giwaffe
There is also the fact that wealth is being transferred abroad.
captam
The Hong Kong Chamber of Commerce is more than comfortable putting up a fight to preserve slave labour conditions in Hong Kong. Heaven forbid! you surely don't expect landlords to lower rents so that lower paid workers can earn a decent wage and work reasonable hours.
And by the way, "democracy" will not fix this problem. We gave just witnessed how democrats are so easily bought by big business. A one-party government could soon sort this problem. Roll on 2047.
impala
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.
keresearch
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
johnyuan
Hong Kong grew up as a cosmopolitan city with urban poor. It never let go of poverty but to mix it with the rest of society. In the 60s on my way to school, I saw restaurants’ leftover food being collected on a spread cloth pulled along Peel Street for consumption where people would buy. There were other working poor folks at that time including coolies or rickshaw pullers. Later during hangover period, again in my neighborhood, silver haired old folks appeared on Staudon Street flashing nowadays the iconic image of selling one’s physical strength pulling a load of discarded boxes for survival. I can’t but come to the conclusion that the majority of Hong Kong has a hardened spot within them that poverty in Hong Kong is normal. Even 50% of their representatives at the LECGO think so too in not pressing for meaningful action against poverty. The historical experience certainly had contributed the perception of poverty as normal; the worst is that the history and the perception also gravely contributed a justification in creating poverty. It is easy to find plenty of evidences the city creates poverty daily by exploiting the politically feeble folks – living in cage or a flat alike. Ask not only what government can do but ask what you also can do.
…..
johnyuan
Shirley Yuen’s recent article in SCMP disagrees law for working hour limit but advocates to import foreign labors. She and the Hong Kong General Chamber of Commerce which she represents or the like must be condemned for selfishly keeping Hong Kong in Stone Age from Enlightenment of a civic society.
XYZ
I agree with the main point of this column. I have a slight quibble of my own, however. I think the inverse relationship referred to in the penultimate paragraph is between wage increases and employment, not unemployment, yes?
impala
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.
XYZ
Ok, I see. Thanks. But I guess that holds true only if one assumes that wage rates are a function of unemployment rather than the reverse, otherwise a strictly inverse relationship would mean higher wages would lead to lower unemployment, which would be a very happy circumstance indeed.
impala
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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