The Bank of East Asia has warned the Asian crisis could drive this year's unemployment rate in Hong Kong up to 4 per cent.
The alarming forecast came after Wing On department store yesterday sacked more than 200 people.
Seasonally adjusted unemployment has surged to 3.5 per cent in the first quarter from 2.9 per cent for the three months to February.
This month's issue of the bank's economic newsletter said there would be an increasing number of closures and bankruptcies in consumption-oriented sectors, and retrenchments in the financial sector.
Corporate restructuring in the banking sector and continual movement of business to low-cost areas would contribute to the surge, it said.
The newsletter pointed out the number of people engaged in the retail, restaurant and hotel sectors in September last year was 434,373, 13 per cent of the total labour force.
