Since 1998, most Hongkongers have churned, with little dignity, through four, perhaps five, jobs. With weak social safety nets, capturing a new job often involved swallowing a lower salary. The result, 22 years later, is that for many Hong Kong families, salaries have
barely changed since 1998, and confidence is poor that the job will continue to provide security.
As families struggle from pay cheque to pay cheque, savings have become a luxury for most, which means that as more approach retirement and old age, the resources to provide security in later life are simply not in place. Job insecurity over decades has generated endemic insecurities for thousands of Hong Kong families.
The scale of the harm inflicted on the Hong Kong economy over the past year is still only vaguely understood, and far from quantified, but can only have aggravated this long-standing problem. Look at some of the random arithmetic. Chinese tourist arrivals that amounted to 200,000 a day in January last year have
shrivelled to 3,000 a day. It is almost impossible to gauge the harm inflicted by this collapse, but it is no surprise that retail institutions such as
Chow Tai Fook Jewellery Group, Sa Sa International and
Tsui Wah are reporting closures and massive staff cuts.
How many of the 17,700
food and beverage organisations in Hong Kong that employ around 250,000 people have gone out of business or are perilously close to doing so? How many have sacked staff or put them on unpaid leave? We have only a random scattering of data, but the picture is not pretty.
Nor is it a surprise that fourth-quarter
retail sales were down by a quarter, that MTR travel in January
shrank by 21 per cent from a year earlier, with lost fares coupled with the cost of post-protest repairs amounting to
HK$1.6 billion (US$205 million). No surprise that the Mandarin Hotel, no less, is reporting 5 per cent occupancy, and that the
hotel sector, which employed around 44,000 people at the end of 2019, is looking at cutting almost 18,000 jobs.
Again no surprise that the
construction sector, which employs around 230,000 people, is understood by the Hong Kong Construction Industry Employees General Union to have laid off 50,000 workers, and put a further 80,000 on minimum hours.
Things are set to get worse as the Covid-19 crisis goes global. Already, the collapse in China’s international tourism has cost the world’s airlines, hotels and tourism businesses an estimated
US$80 billion, according to the Economist Intelligence Unit’s calculations. Most of these losses are concentrated in East and Southeast Asia, which goes towards explaining why Japan’s economy contracted more than 6 per cent in fourth quarter of last year, with little of the Covid-19 impact yet accounted for.
With more than 55 million people in mainland China still in quarantine lockdown, the manufacturing and consumption that for so many years fuelled the global economy has crashed. Tsinghua University’s Professor Zhu Min
estimates that the cost so far to the Chinese economy is US$196 billion, with consumer spending down over the past two months by US$60 billion.
China’s car sales in January were down by
nearly 20 per cent year on year, given that locked-down
Hubei is home to 60 per cent of China’s car sales, and 54 per cent of the country’s car and car parts production, all of which augurs ill for the car industry not just in China, but worldwide.
In short, the employment uncertainties and income stagnation that have sapped morale in Hong Kong for the past two decades are set to get severely worse, with no clear signs of when a recovery might emerge.
Thank heavens, then, for Financial Secretary Paul Chan Mo-po’s budget
handouts, unveiled last week. Thank heavens too, for the cash mountain built by the government over the past two decades to provide for the
rainy day. Many heavily-indebted governments around the world would not have the resources to intervene so energetically.
While I am absolutely no fan of indiscriminate one-off cash handouts, those unveiled in last week’s budget must be applauded as emergency relief to many who might otherwise be facing a truly grim year ahead.
But the one-off handouts can only be the first step towards recovery. The government faces a systemic crisis of chronic job insecurity, and the long-term challenge is to use its massive mountain of
cash reserves to tackle this challenge. That is not just a matter of higher
minimum wages and a more credible compulsory
pension scheme – though these are important – but of building an education system that can build the skills base that our families need for this all too uncertain future.
Our government, which has blackened its reputation by hunkering through the past year’s crises without providing the leadership that our community needs and deserves, must focus. Chan has, in his budget, provided an encouraging start. But it is just that – a start.
David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view