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Many government-led infrastructure projects were delayed because of filibustering in the Legislative Council.

Construction and retail sectors the worst hit in Hong Kong’s latest unemployment figures

Experts warn situation may not improve in the short term with infrastructure delays and an influx of fresh graduates to come

The construction and retail sectors are the worst hit by Hong Kong’s economic doldrums, as the latest unemployment rate remained at the highest level in two years.

The government said on Tuesday that the overall jobless figure stood at 3.4 per cent between February and April, unchanged from the reading of the three months between January and March. Before that, the unemployment rate had remained at 3.3 per cent for eight consecutive months.

This came after the city posted the worst quarterly economic growth figure in four years, which only expanded 0.8 per cent in the first quarter compared with a year earlier.

Economists warned the jobless rate – which had remained at a relatively low level – will climb further by the end of this year, through delays of the city’s large infrastructure projects and an expected influx of fresh graduates over the summer.

“The near-term employment outlook remains overshadowed by the strong external headwinds and slow-growing local economy,” said Secretary for Labour and Welfare Matthew Cheung Kin-chung, adding the weakening demand in trade, tourism and construction sectors “warrants particular concern”.

A stable local sector supported by the low unemployment rate was one of the major drivers of
economic growth in the past year, when both tourist figures and trade figures dwindled.

But private consumption – a component in GDP which reflects local spending – only grew 1.1 per cent in the first quarter, compared with the 4.7 per cent in 2015.

The unemployment rate of construction sector surprisingly increased by 0.5 percentage points to 5.4 per cent between February and April over the preceding period. The government contributed the increase to “the recent property market consolidation and the fall-off in construction activity”– in addition to “the seasonality factor”.

Billy Mak Sui-choi, an associate professor in Baptist University said the sudden deterioration in the construction sector in the latest figures showed many workers became unemployed after they finished the last project instead of landing to another one.

He said many government-led infrastructure projects – accounting for 40 per cent in the city – were delayed because of filibustering in the Legislative Council and this had taken its toll on the labour market.

Mak also said that the new crop of graduates who are expected to enter the job market between June and August could intensify the competition.

“Employers tend to hire one experienced worker at a slightly higher cost than train several fresh graduates from the very beginning,” said Mak, adding this was a common practice for businesses to save costs in an economic downturn.

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