Hong Kong’s jobless rate rose to 5.2 per cent for the February to April period, the highest in more than a decade, as the coronavirus pandemic continued to hammer businesses across the city. The rate was 1 percentage point higher than the 4.2 per cent recorded in the January to March period, official figures released on Tuesday showed. The underemployment rate also rose 1 percentage point, to 3.1 per cent, the highest in more than 15 years, against the previous three-month period up to March. The figures came as Secretary for Labour and Welfare Dr Law Chi-kwong said more than 90 per cent of employers were expected to apply for wage subsidies under the HK$81 billion (US$10.5 billion) coronavirus relief scheme. The city has not seen an employment landscape this grim since the global financial crisis in 2009, when the unemployment rate hit 5.2 per cent in the August to October period that year. “The labour market showed further sharp deterioration as the Covid-19 pandemic continued to weigh on a wide range of economic activities,” Law said. The Covid-19 pandemic has led the government to introduce far-reaching social-distancing rules and close all but three border checkpoints, delivering a blow to pillars of the economy including aviation, tourism, hospitality, retail, food and beverage as well as construction. Consumer and tourism-related companies have been especially hard hit, with their rate of unemployment rising to 9 per cent, the highest in more than 15 years, and underemployment increasing to 5.9 per cent, the highest on record. For the food and drink sector, the jobless rate was 12 per cent, while for construction the figure stood at 10 per cent. “Labour market conditions in most other sectors also deteriorated,” Law said, pointing to the education, information and communication, arts and business services sectors.“The labour market will continue to face immense pressure in the near term.” Financial Secretary Paul Chan Mo-po recently warned about risks to the economy in the second quarter following the return of locally transmitted coronavirus cases. Chan on Sunday said “a resurgence of violence” – related to anti-government protests that have gripped Hong Kong since last June – could be the greatest obstacle to the city’s recovery. Kelvin Lau Kin-heng, senior economist for Greater China at Standard Chartered, said the unemployment situation was worse than expected and showed social-distancing measures had affected various sectors. Lau predicted the jobless rate would continue to worsen, possibly exceeding 6 per cent in the third quarter. “As social distancing measures are expected to be kept for a while and there are signs that local protests would become active again, Hong Kong’s economy will continue to face pressure in the short term,” Lau said. ‘Hong Kong firms that sack workers but demand subsidies face cash penalties’ But Chinese University economist Terence Chong Tai-leung was more optimistic, saying the unemployment rate might hold steady or even fall in May. Many restaurants had resumed operations, and some hotels were also doing more business, he said. “According to the wage subsidy scheme … the number of employed people cannot be lower than the number in March, so there is a hope that the employment support scheme can help lower the jobless rate in May,” Chong said. Under the Employment Support Scheme, the government will, via employers, pay 50 per cent of employees’ salaries for six months, with the monthly subsidy for each worker capped at HK$9,000. More than 90 per cent of employers, or almost all of about 270,000 bosses, were expected to apply for subsidies. Government to expand HK$80 billion wage subsidy scheme Labour minister Law stressed the need for the scheme to remain flexible, and defended criticism that the penalties for employers who applied for wage subsidies despite sacking workers were too small to be a deterrent. “I think at least over 90 per cent, though not as high as 99 per cent, [of employers] will apply,” he said. “As the pandemic and the social unrest have crippled many enterprises for quite a period of time, the wage subsidies from the government would alleviate the pressing needs for them.” To receive the first tranche of subsidies in three to four weeks, employers must promise the number of employees on payroll between June and August is no smaller than it was in March, including those on unpaid leave. The money received by employers must all go to the employees. Employers who breach these conditions are subjected to cash penalties, depending on the scale of the company concerned, and the percentage reduction in headcount. Help us understand what you are interested in so that we can improve SCMP and provide a better experience for you. We would like to invite you to take this five-minute survey on how you engage with SCMP and the news.