Key to unemployment is already in the door

There are some facts behind the rising unemployment figures to which the Hong Kong Government is giving less publicity than it ought.

They are that the Government has itself, in part, to blame for opening the doors too widely in recent years to foreign and mainland labour and that no one can control the number of emigrants who decide to return home.

The unemployment rate, at 4.2 per cent, is still not high by Western standards and it is still more a problem of population growth outstripping jobs growth than a decline in the number of jobs, although a decline does threaten if the economic troubles persist.

Look at my first chart on population growth. It shows the overall growth rate at 3 per cent, the highest it has been since the rapid influx of illegal immigrants in the early 1980s.

If it were determined by the number of births over the number of deaths, this growth rate would have been only 0.42 per cent now.

Numerically, the population grew by 195,800 people last year. Of this, 50,287 were legal immigrants from the mainland, 22,800 were foreigners (based on 1996 figures and I have assumed the same for last year).

Natural increase was responsible for 28,300 of the total, leaving 94,413 as returning emigrants. This assumes the mainland figures capture the overall influx, but all these figures must be taken as a little woolly.

Now look at what this did to the labour force.

The year-on-year growth rate in the second chart is illustrated as a three-month average to put it on the same basis as the jobless figures which are reported that way.

The data shows that in the fourth quarter of last year, the labour force grew an astounding 5.53 per cent over the same quarter the previous year.

These people also appear to have found jobs they wanted despite the economic troubles that had set in by that time. The unemployment rate remained below 2.5 per cent until February. Only then did the job market begin to soften significantly, mostly because there were too many people chasing an insufficient number of jobs.

What has happened here is that the Government has been too willing to listen to the blandishments of employers who seek to keep wages down by bringing in labour from abroad when Hong Kong's own workers would otherwise reap the harvest of their economic success through higher wages.

The returning emigrants probably play only a small role in all of this.

If they have enough money to move abroad they are largely self-employed or work in middle-class occupations that were secured before they returned. They are white-collar workers. Unemployment is largely a blue-collar phenomenon.

It has happened before.

Unemployment was up to almost 4 per cent in 1995 because the doors had been opened too widely to outside labour. The remedy then was to nudge the doors closed again. The same remedy is the obvious one now. There is just too much stop and go in Government policies.