Hong Kong’s worker shortage is not just a local problem, it’s part of a global contest

An ageing Hong Kong looking to import labour will find stiff competition – just six Apec economies can expect a growing workforce in coming decades
To cope, the city needs a comprehensive strategy to both attract workers and support locals

David Dodwell

Published: 6:15am, 10 Jun 2023

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As Hong Kong’s economy recovers from three dreadful years, we are beginning to hear a rising chorus of alarm and complaints about skill shortages.

The loudest, and perhaps most detailed, call to action came this week from the Hong Kong General Chamber of Commerce, which bewailed that three quarters of its member companies were struggling with staff and skills shortages.

Emigration from Hong Kong was a key reason, according to the chamber’s chief executive, George Leung Siu-kay. The city is estimated to have lost 210,000 workers between early 2019 and the end of 2022. This was driven not just by families using British National (Overseas) passports to resettle in the United Kingdom, but also by some companies shifting their headquarters to hubs like Singapore.

While the chamber complained that the most acute shortages were among junior management, there have been cries for help across the economy. The construction sector is said to be short of about 40,000 workers, and the airport reportedly needs 20,000 new staff to rebuild to 2019 levels.

At the end of 2021, Hong Kong also had 60,000 fewer domestic helpers than in January 2020, which probably meant many thousands of mothers being kept out of the workforce.

While the government scrambles to address these shortages with skills training and other policies, calls will undoubtedly intensify for initiatives that attract foreign workers.

Elite programmes like the Top Talent Pass Scheme – which offers two-year visas to those earning at least HK$2.5 million (US$319,000) a year, and to graduates from the world’s top 100 universities – may have attracted media attention, but they will have no significant impact on the massive and urgent needs on construction sites and other unglamorous areas.

It is here that the government’s acute recruitment challenges begin. Not only will we be competing with dozens of other economies worldwide for migrant workers, but the number of economies with surplus labour, or growing workforces, is also dwindling.

Global demographics provide a tough and deteriorating background. Falling birth rates and the rising number of people moving into retirement are leading to fast-rising workforce shortages just about wherever you look. In work I did recently for the Asia-Pacific Economic Cooperation forum, I found that just six of Apec’s 21 economies can expect a growing workforce in the coming decades: Papua New Guinea, Peru, Mexico, Indonesia, Malaysia and the Philippines.

As workforces shrink in the other 15 Apec economies, including Hong Kong, the pool from which they hope to draw is also steadily dwindling. Indonesia, Malaysia and the Philippines stand alone in the region with significant younger populations growing up into the workforce.

The population aged under 15 in Indonesia and Malaysia is more than 30 per cent of the size of the working population. In the Philippines, the under-15 population is almost half as big as the working population it will soon join – making it by far Asia’s richest potential pool of possible migrant workers. Competition for their skills is likely to be fierce.

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While most of us in East Asia may be reluctant to search further afield, the uncomfortable reality is that only India and Pakistan are likely to generate a steady flow of migrant workers.

By far the largest reservoir of labour worldwide – skilled and unskilled – will sit in Africa, whose population is expected to rise from 1.43 billion today to above 3.9 billion in 2100. While most of our populations will be in decline, Nigeria, the Democratic Republic of Congo and Ethiopia are expected to add around 850 million to the world’s population by 2100, according to the United Nations.

Whether economies like Hong Kong and others in East Asia would seriously consider searching so far afield to meet future labour shortages is moot – the demographics suggest we may soon have no choice.

This acute demographic squeeze is occurring at a time of unprecedented labour market disruption, according to the World Economic Forum in its recent “Future of Jobs” report. In a survey accounting for 673 million jobs, respondents expected 69 million jobs to be added and 83 million lost over the next five years.

Most new jobs will be driven by new technologies (what the report calls “algorithmic displacement” at the “human-machine frontier”), by green transition businesses, climate change adaptation and supply chain localisation. The losses will be concentrated in clerical and secretarial roles.

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In the fog generated by this labour market “churn”, the challenge of identifying the skills needed to secure future growth, and then supplying them, is likely to stress-test most governments, and demand rising reliance on migrant labour.

This suggests that Hong Kong’s government needs to take a hard strategic look at future skill needs, including a comprehensive strategy to ensure we attract foreign workers who can meet those needs unmet locally – from so-called top talent to carers for the elderly.

Because we will be competing keenly with many other economies – including mainland China as its working population declines – this strategy will need to include well-focused incentives. It may mean clear policies for economic and social inclusion and better attention to adequate housing.

It may mean providing skills development. It should certainly include carefully targeted support for the local workers affected. This is not the time for a piecemeal approach.

David Dodwell is CEO of the trade policy and international relations consultancy Strategic Access, focused on developments and challenges facing the Asia-Pacific over the past four decades