Advertisement
Advertisement
An employee looks out from a half-shuttered store in Tsim Sha Tsui, Hong Kong last December. Photo: Bloomberg
Opinion
Inside Out
by David Dodwell
Inside Out
by David Dodwell

Hong Kong’s moment of crisis is exposing its true challenge: chronic job insecurity

  • The triple blows of trade war, street protests and Covid-19 have only laid bare Hong Kong’s long-standing problem of job insecurity, which began in 1998 and has left thousands of families with stagnant incomes and endemic uncertainties
As Hong Kong is engulfed by the perfect storm of the trade war between the United States and China, self-immolating upheavals linked with the extradition idiocy, and the Covid-19 panic sweeping the world, my conviction is reinforced that the heart of Hong Kong’s long-festering challenge is not erosion of freedoms, lack of access to good housing, or even low minimum wages and gross inequality.
No, at heart, our main challenge is job insecurity. The past year has placed the livelihoods of tens of thousands of hardworking Hongkongers in chronic jeopardy. The US-China trade war threatened the future of thousands of small Hong Kong trading companies. The half year of masochistic self-harm around the extradition bill put thousands of innocent bystanders at risk.
And now the Covid-19 crisis, which is only likely to get worse worldwide in the coming months, has dealt a crushing blow to tens of thousands of jobs.
But Hong Kong’s job insecurity is not a one-year problem, just as the street riots were not conjured out of last year’s extradition bill controversy. It began in 1998 with the Asian financial crisis, crashed through the dotcom collapse and Y2K, then the severe acute respiratory syndrome outbreak in 2003 and the global financial crash in 2008.
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.

‘We are wasting our resources training so many university students’

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.
Anywhere you look, job casualties proliferate. Whether it is HSBC cutting jobs globally, or Hong Kong Airlines laying off 400, or Cathay Pacific Airways asking staff to take unpaid leave, or Pricerite closing up to 12 of its 27 stores, putting 800 jobs at risk.
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.

The coronavirus has hit economies hard, quickly. But how long will it last?

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

Post