The local employment market has recently been hit by a spate of unfavourable news. Following a theme park’s announcement of layoffs earlier, the Census and Statistics Department (C&SD) released last week the latest unemployment rate of 3.4 percent for the first three months of 2016, registering an increase of 0.1 percentage point over the previous figure from December 2015 to February 2016. This is the highest level since late 2013. The unemployment rate saw an increase in most industry sectors, with increases more noticeable in the retail and construction sectors. Some may think that the latest unemployment figure went up only slightly and there is no need to worry. However, when taking into account other economic data and the prevailing social circumstances, the unemployment rate has actually rung the alarm bells for us. It is time we contemplated the challenges facing Hong Kong in its future economic and social development.
The lessons of history may give us some insights into the road ahead. We may draw inspiration from the classic Japanese TV drama Long Vacation aired 20 years ago, which has reignited a lot of discussions lately. As many commentators have pointed out, one of the reasons for the huge success of Long Vacation premiered in 1996 was its grasp of the unemployment anxiety pervading Japanese society back then. It is well known that in the early 1990s, Japan, after decades of rapid economic growth, suffered from the burst of the economic bubble and the collapse of its stock and property markets, resulting in the closures of enterprises on a massive scale. Japan entered the so-called “Lost Decade” (while some argued that the period lasted two decades). In the mid to late 1990s, Japan's unemployment rate increased gradually from about 3 percent to almost 5 percent. Though a rather low level in many countries by today’s standards, it was a severe blow to the Japanese people who had experienced economic prosperity for so many years. At the same time, the lifetime employment system, of which Japanese enterprises were once so proud, was gradually replaced by a part-time system. Japanese youths became disoriented and restless in a relatively unstable employment market, an experience unknown to the previous generation. Therefore, the leading characters in Long Vacation struck a chord with many young viewers sharing the same plight in Japan.
No doubt, we cannot simply compare or equate the situation in Hong Kong today with that of Japan back then. However, whether it is Japan, Hong Kong or other mature economies, we will always have to go through the throes of economic restructuring after a long period of rapid growth. The search for new engines of growth can be long and difficult. With fierce global competition today, if we cannot find new drivers of growth based on our own strengths, young people will always be the most vulnerable and the first to be affected.
Looking back at Hong Kong, we also experienced hard times in the 1997 Asian financial turmoil. With the launch of the Individual Visit Scheme and other policy initiatives in 2003, coupled with the rapid growth of the Mainland’s economy, our economy began to go through a long recovery period. Although a financial tsunami occurred in 2008, we could still benefit from the rapid growth of the Mainland’s economy at that time. We were able to maintain a relatively stable economic growth, enjoying almost full employment. In recent years, however, the Mainland’s economy has also undergone structural transformation and is facing many challenges. According to the latest figures, its economic growth in the first quarter has slowed to 6.7 percent. It is estimated that growth of similar level will become the new norm in the Mainland’s economy. Hong Kong’s economy is interwoven with the world’s as well as the Mainland’s economy and cannot be insulated from them. This year’s economic growth is forecast to be only about 1 to 2 percent, which is a remarkable slowdown as compared with 2.4 percent last year, and the average growth rate of 3.4 percent over the past decade. It is an indisputable fact that great challenges are present in the operating environment of many industry sectors, especially the retail, tourism and construction sectors.
Moreover, as with Japan and other mature economies, Hong Kong is facing the pressing problem of population ageing. According to the population projection released by the C&SD, our overall labour force is expected to peak in 2018 and then gradually dwindle. Population ageing may lead to a shrinking workforce, which means that not only will the future working population have to cope with higher elderly dependency ratios with larger public expenditure on medical care and welfare, but overall consumption will also be reduced as a result. This will significantly undermine the momentum for sustainable economic growth and economic restructuring.
We are standing at the crossroads of social and economic development in Hong Kong. The Government and the public have to ponder our future in a calm and objective manner. For example, when facing an economic downturn, advanced economies across the world usually will, from the perspective of strategic overall social development, invest in infrastructure projects that have long-term benefits. This can, as a countercyclical measure, help stabilise overall employment and enhance the long-term competitiveness of society. When we discuss the issue of local infrastructure investment, shall we focus on the detailed analysis of its benefits and long-term effects, instead of labelling all the infrastructure projects as “white elephant projects” and carrying on filibustering indefinitely?
Take another example. The tourism industry has created a lot of job opportunities for the grassroots in Hong Kong. I believe that most people will agree that the tourism industry should develop in the high value-added direction. When we consider various suggestions, shall we spend more time discussing their attractiveness, cost-effectiveness and feasibility, rather than intensify the conflicts between the Mainland and Hong Kong? Besides, when exploring Hong Kong’s economic positioning and ways to capitalise on our connection with the Mainland and its economic development strategies, could we objectively analyse changes in the regional, national and global situations as well as Hong Kong’s competitive edge, instead of simply dismissing all our economic collaborations with the Mainland as “pleasing” or “fawning upon” the latter? After all, Hong Kong’s economic edge has all along lain in its bridging role in fostering closer ties between the Mainland and the rest of the world. Over the years, we have been exploring the direction of future economic development from Hong Kong’s perspective, but it does not mean that we should close our doors and refuse to make progress.
When I was a legislator in 2009, I mentioned on the RTHK’s programme Letter to Hong Kong after visiting Venice in Italy that we should learn from Venice’s experience. Instead of standing still, we should strive to map out the long-term positioning and development based on national and global development as well as our own advantages. A few years have passed. Looking at the situation of our city as it is, shouldn’t I be worried? I well understand how disoriented and anxious our youngsters feel about Hong Kong’s future. We, from the earlier generation, should listen more to what the youngsters think, and should not casually criticise them as less capable than their previous generations. Meanwhile, we should not “expect” that our economy can grow rapidly again solely by following the same old track, while ignoring the impacts brought by economic globalisation and innovation and technology, as well as changes in the national and world situations. Standing at the critical juncture of our social and economic development, may we all put aside our prejudices and join efforts to make breakthroughs in our economic development.
24 April, 2016
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