TO some, Acting Secretary for Education and Manpower Mathew Cheung Kin-chung's prediction that the economy has now matured to the stage where it is no longer possible to expect unemployment levels to return below three per cent will sound like scare-mongering. After years of uninterrupted growth and the claims that Hong Kong's troubles are largely the result of external factors, it is still easy to believe the difficulties will disappear as soon as the regional crisis is resolved.
In fact, however, Mr Cheung is merely being realistic. Although it has been rare for government to recognise such painful truths in recent months, it is precisely such straight talking which Hong Kong now needs. Indeed, he may not have been straight enough. It may be some time before the SAR again sees anything like only three per cent of the workforce out of a job.
In two weeks, the chaos at the airport has cost the economy $20 billion - according to the Government's own estimates - or 0.35 per cent of GDP. That in itself is enough to slow down the recovery as it will take some time to make up for lost business. But it is still only a temporary additional burden.
The underlying problems caused by the maturing of the economy will not go away so quickly. They are structural to an economy which has more or less completed the transition from low-end manufacturing to services, lost its industry to a giant but low-cost neighbour and is no longer able to generate the jobs, skilled or unskilled, to create full employment.
The external factors such as the regional crisis have merely been the catalyst that has brought these underlying weaknesses to the surface. The economy now has to adjust itself to these new realities. This will, as Mr Cheung indicates, be painful. It may also require some adjustment, not only for the workforce, which already accepts lower real wages, but also on the part of the Government and employers.
Welfare issues may have to be examined. It is one of the hallmarks of a mature economy that long-term unemployment is no longer immediately curable by forcing the jobless to look for work or starve. Instead of looking down on European economies which, it claims, discourage worker flexibility with high welfare payments, the SAR will have to learn to deal with its own long-term unemployed.