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Rachel Clarke

Job losses and trouble for another finance firm topped a day of gloom and despair in Hong Kong yesterday, brightened only by a gain in local stocks.

 Cathay Pacific announced 760 redundancies - as the Government announced unemployment was at its highest since March.

 At the same time, anxious investors were queuing to get their money back from CA Pacific Securities after fears arose about the firm's liquidity.

 Business was halted in three arms of CA Pacific Finance - CA Pacific Forex, CA Pacific Futures and CA Pacific Securities - because of severe cash flow problems, the company said. Investors are being sought to bail it out.

 The Securities and Futures Commission was informed of the move and said it was monitoring the company closely. The group's parent, Capital Asia Ltd, also suspended trading in its shares.

 Financial turmoil and the current tourism crisis were blamed by Cathay Pacific for its redundancies, the climax of a two-month retrenchment which has seen 7.5 per cent of jobs shed at the airline.

 Yesterday's job losses hit 460 workers in Hong Kong and 300 at overseas offices.

 Cathay said the cuts were an unavoidable part of a streamlining exercise to cope with falling revenues and passenger numbers.

 The redundancies follow a recruitment freeze ordered last November which has seen 365 vacancies left unfilled. It effectively means Cathay has lost 1,125 staff or 7.5 per cent of its 15,000 workers worldwide.

 'Just six months ago I would never have thought we would be forced to resort to such painful measures as this,' said managing director David Turnbull.

 He claimed they had had no alternative, saying: 'We cannot just sit here and wait for the market to turn around and save us. We need to keep our services competitive and be at our best possible size and financial strength to capture growth when it returns.'  December revenue plunged 24 per cent compared to the same month in 1996, and the first two weeks of this month have seen the decline continue.

 Sacked staff will receive two-thirds of their monthly salary multiplied by the number of years' service, plus three months' salary as a 'goodwill' payment, plus pay in lieu of notice and pension funds.

 The lay-offs follow 2,700 redundancies at Yaohan Department Stores in November.

 Official estimates released yesterday put the unemployment rate at 2.5 per cent for the three months ending in December, up 0.1 per cent, the highest since March.

 The underemployment rate for part-time workers was 1.3 per cent, up from 1.1 per cent, according to the Census and Statistics Department.

 The Lunar New Year could prove a crunch period. Traditionally, it is when employers decide whether they need to cut costs, warned Ian Perkin, chief economist at the Hong Kong General Chamber of Commerce.

 He saw 'disturbing signs' in the unemployment rates for the restaurant, transport, decoration and maintenance sectors - the latter probably caused by the lack of turnover in the housing market.

 The chamber has predicted unemployment may rise to 2.8 per cent - other forecasts top three per cent - with the economy reliant on what happens in the US and mainland markets.

 'The most positive thing we can say is that with the labour supply continuing to grow at about four per cent, employment is still going up but unemployment is also going up.' 



Little joy amid the gloom