In Hong Kong, High-Skilled Jobs Decline
Hong Kong is facing an expansion of low-skilled employment at a time when the number of high-skilled jobs is contracting, reflecting a torpid environment for the territory’s financial services industry and other white-collar sectors.
In the second quarter, the number of high-skilled jobs slipped by 0.9% from a year earlier, following a 2.4% drop in the first quarter. By contrast, non-professional jobs surged 3.8% in the second quarter after rising 4.7% in the first.
Overall, total employment rose 2.5% year-on-year to 3.75 million positions in the second quarter. Of these, 1.38 million are high-skilled jobs while 2.37 million are in the low-skilled segment.
The reason for a contraction in the number of high-skilled positions, according to human resources professionals, is weak hiring in the financial sector. The financial-services industry contributes about 20% of employment and just under a fifth to national output but it’s share has been falling. That’s in contrast to rapid growth of the retail sector and other blue-collar industries that have driven GDP growth lately as more mainland Chinese shop here.
Hong Kong’s GDP grew 3.3% in the second quarter, a healthy clip. The jobless rate also remains a relatively low 3.3%. But economists are concerned the increasing reliance on low-skilled sectors could hurt productivity growth and drag on the economy in the future.
“I believe the contraction of Hong Kong professional sector is more related to financial deleveraging over the global economy,” said Hang Seng Bank economist Ryan Lam. “Financial centers like Hong Kong are more vulnerable to the end of the credit-driven era than Singapore, which has a diversified manufacturing base.”
Hong Kong’s recruitment agencies said they’d witnessed a decline in middle-management jobs, especially in financial services.
“The global financial headwind has made companies more cautious in creating permanent headcount or making replacement hiring, especially mid to senior positions,” said Lancy Chui, regional managing director for Greater China at ManpowerGroup.
She noted some financial institutions continue to downsize and restructure operations following the financial turmoil in 2008.
“I don’t see any new posts for professional jobs in financial services this year,” said another senior consultant for a recruitment agency in the city. “It’s only job replacements filled by a junior post, with lower pay.”
Some recruiters point to cost-cutting in the financial-services industry globally as a factor contributing to Hong Kong’s changing employment landscape.
“Managing costs is still the top priority for most organizations in financial services, and this is the main factor behind the current cautious hiring environment,” said George McFerran, Asia Pacific managing director of eFinancialCareers, a recruitment firm.
GDP has gotten a boost in recent quarters from the rising tide of spending by cashed-up Chinese mainlanders visiting the territory to hunt for everything from daily necessities to luxury goods. Between 2007 and 2011, the contribution of tourism, including the retail trade, to the city’s GDP rose to 4.5% from 3.4%.
Alexa Chow, managing director of Centaline Human Resources Consultant Ltd., said she expected demand for non-professional jobs in the retail and services sectors to remain strong for years to come as tourism from mainland China continues to boom.
Still, some economists worry that the trend toward lower-skilled employment may push down economic growth in future quarters.
“A structural shift of employment toward this low-profitability, labor-reliant sector could cause a gradual slowdown in GDP growth,” said Hang Seng Bank’s Mr. Lam. “If this trend continues, Hong Kong could turn into another tourism city filled with low-skilled labor instead of being an international financial center.”