HK's unemployment falls, but workers don't get the rewards

Some good news amid the gloom: Hong Kong's jobless rate over the three months to August dropped to just 3.2 per cent.

That not only means the rise in unemployment following the collapse of Lehman Brothers three years ago has been completely eliminated. As the first chart below shows, it also means Hong Kong's unemployment rate has fallen to its lowest level since the before the Asian financial crisis of 1998.

With such low unemployment you might think Hong Kong's workforce would be happy, especially when they look at jobless rates elsewhere in the world. In the United States 9.1 per cent of the workforce is unemployed. In the euro zone the rate is 15.7 per cent. Even in booming Australia, 5.3 per cent are out of work.

Yet Hong Kong's workers are far from happy. In pretty much any other developed world economy, a jobless rate of 3.2 per cent would be called full employment. More than that, in most countries 3.2 per cent unemployment would be considered a dangerous shortage of labour; the sort of shortage where intense competition among employers to attract workers would threaten to ignite a dangerously inflationary upward spiral in wages.

As a result, officials, businesses and many ordinary people would be crying out for more immigrants to fill the vacancies.

In Hong Kong, however, there are no such calls. Quite the reverse: the vehemence of political and popular opposition to recent suggestions that an estimated 100,000 foreign maids who have lived in Hong Kong for more than seven years could be granted permanent residency shows that opposition to immigration remains deeply entrenched, despite the low unemployment rate.

This opposition has been dismissed by some as blind prejudice. Yet a closer examination shows that it is understandable, at least as far as Hong Kong's workers are concerned.