Hong Kong youth being left behind by government’s coronavirus response

Young people with and without jobs are struggling during the pandemic and finding few government programmes capable of meeting their needs
Two-year, interest-free deferral of student loan repayment receives majority support by allowing borrowers to generate savings in turbulent times

Justin Chan

Published: 9:30am, 18 Jun 2020

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While Hong Kong has been mostly successful in containing the spread of Covid-19, its gross domestic product has plummeted and unemployment has risen sharply. Unemployment tends to hit the young harder than those older, and now is no different. Unemployment among people aged 20 to 24 hit 11.4 per cent for the three months to April, according to the census department.

The reality could be worse. MWYO commissioned the Hong Kong Institute of Asia-Pacific Studies to interview 509 Hong Kong residents aged 18 to 34 in May. The survey found 12.4 per cent of the respondents self-reporting unemployment. Among them, nearly 70 per cent expressed little hope of finding a job within the next three months.

Many service workers are unemployed as Hong Kong’s tourist numbers suffered a drop of 99.9 per cent in April compared with last year, with gyms, beauty parlours, bars and other locations under lockdown. How quickly the numbers return to pre-pandemic levels after lockdown measures are lifted is unknown.

To persuade employers to retain workers, the government is giving them financial help through subsidising salary payments for half a year. In return, employers must pledge not to implement redundancies and to spend all subsidies on wages.

This does not directly benefit workers. The only direct financial help for unemployed workers is the Comprehensive Social Security Assistance Scheme, available to all low-income individuals and families. Only 22.2 per cent of those surveyed see this as effective. It is a modest substitute for unemployment benefits since the amount for single applicants is HK$2,615 per month, far from sufficient to cover rent and other living costs in Hong Kong.

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The government should at least consider providing short-term unemployment benefits to help young workers who lost their jobs relieve financial stress while they focus on job-seeking. The government should make up for this policy vacuum with a scheme specifically for the unemployed rather than making minor revisions to the current system.

Employed youth are struggling as well. Amid the pandemic, 22.1 per cent of young workers have been forced to take unpaid leave and 12.4 per cent had to work fewer hours. Many have seen their income drop since the end of last year, with 7.1 per cent losing more than half. To ensure workers’ rights are protected, the Labour Department should monitor employers and take swift action if they act unlawfully and hurt their employees.

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The government has not implemented relief specifically for employed youth. Thus, young people who have lost income are more critical of economic relief policies than those whose income increased or remained stable. Only 13.4 per cent of employed young people with income loss expressed approval, while 26 per cent of all other employed youth felt similarly. It is important to address the needs of young workers who have a job but also reduced income as their economic plight may be comparable to their unemployed counterparts.

There are some relief policies that can help employed young people. Interest-free deferral of student loan repayment for two years was a popular option among young people, with 57.3 per cent of respondents saying it could effectively relieve their economic burden. It was more popular than the HK$10,000 (US$1,300) cash handout for all Hong Kong adult citizens, which 45 per cent considered effective.

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One reason may be that deferring repayment helps borrowers have more disposable income immediately. In contrast, it was unknown during the survey when the HK$10,000 payment would be available. This shows relief measures that have immediate effects may better serve employees.

Not having student loan payments for two years means they can save around HK$50,000 during this period without interest or penalty. While the loan must eventually be repaid, this short-term measure can have a greater effect than cash handouts in relieving young workers’ financial stress.

The government should consider further measures to mitigate financial hardship, such as writing off some student debt, if this recession continues. Timely economic help that is tailored to the needs of employed and unemployed youth is essential for the government to regain young people’s trust and confidence.

Justin Chan is an associate researcher at MWYO, an independent think tank that focuses on youth issues in Hong Kong. His research is mainly on youth employment and economic policies in Hong Kong

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