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Amy Nip

A shrinking workforce is expected to slow down economic growth in the city for the next five years, the latest Hang Seng Bank research shows.
The economy is forecast to expand by 3.3 per cent per annum between 2015 and 2020 - down from an average annual growth rate of 4 per cent from 2010 to 2013, according to the report released yesterday.
Half of that economic growth from 2010 to 2013 was fuelled by an expansion of the workforce, the report showed.
It coincided with an increase in the labour force participation rate over the past few years - meaning more people were actively looking for a job and available for work.
"The total growth contribution from labour has averaged 2.2 percentage points since 2010. We have questions about the sustainability of this trend in the coming five years," the bank said.
Labour's contribution to growth will be increasingly constrained by demographics and limited room for a rise in the participation rate of the work force, the report added.
The city faces a rapidly ageing population - by 2041, one-third of the population will be aged 65 or above. That's an increase of 161 per cent - from 980,000 in 2012 to 2.56 million by 2041, according to government statistics.
The manpower issue was raised last month when the government announced a HK$110 billion plan to build seven new rail projects in phases from 2018 to 2026.
Lawrence Ng San-wa, president of the Construction Sub-Contractors Association, voiced concern about the city's ability to find workers for the railway projects, predicting there would be a shortage of 8,000 to 10,000 staff.
Meanwhile, an HSBC report on equity strategy also released yesterday, warned of a possible contraction in domestic demand and increased market volatility as the US gears up for an interest rate rise.
"In addition, political developments in Hong Kong have so far added uncertainty to earnings prospects in the city, although at this point in time it is difficult to assess how much," the report said.
GDP contracted for the first time in three years in the second quarter, causing the government to lower its 2014 forecast to a range of 2 to 3 per cent - down from the previous estimate of 3 to 4 per cent.
The government forecast annual growth of 3.5 per cent between 2015 and 2018 in its budget this year.
One way to expand the workforce - and the economy - would be an extension of the retirement age, according to Dr Tommy Leung Tin-cheuk, an assistant professor of economics at Chinese University. He added that education and technological development were also key to maintaining economic growth.
Secretary for Commerce and Economic Development Gregory So Kam-leung said Hong Kong should work towards becoming a knowledge-based economy.
Traditional industries should invest resources in high value-added processes such as product development and design, brand promotion and management, and research and development, So said.
"Promoting innovation and technology can help to increase the capacity and productivity of our economy. Innovation and technology is also an industry with huge potential for growth in Hong Kong," he added.
 


Labour woes will put brakes on growth

A shrinking workforce is expected to slow down economic growth in the city for the next five years, the latest Hang Seng Bank research shows. Photo: Bloomberg

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Hong Kong

Economy forecast to expand at the slower annual rate of 3.3pc in the next five years as an ageing population means fewer workers


A shrinking workforce is expected to slow down economic growth in the city for the next five years, the latest Hang Seng Bank research shows.


Labour woes will put brakes on growth

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Economy forecast to expand at the slower annual rate of 3.3pc in the next five years as an ageing population means fewer workers

Economy forecast to expand at the slower annual rate of 3.3pc in the next five years as an ageing population means fewer workers