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The economy and livelihoods amid the epidemic

Since the fourth wave of outbreak in Hong Kong late November last year, the SAR Government has tightened up various restriction measures on social distancing and the operation of specified premises. With these measures in place for a month or so, the number of confirmed cases have come down from the peak of over a hundred cases per day. However, the situation remains volatile as dozens of new cases are still reported daily, with high ratio of cases from untraceable sources and local clusters in individual districts.

The prolonged restriction measures have put enormous pressure on the economy and people’s livelihoods. In particular, many enterprises have been struggling to keep themselves afloat since the outbreak in Hong Kong a year ago. Although the Government has rolled out series of supporting measures totalling more than HK$300 billion under the last Budget and the Anti-epidemic Fund, these financial subsidies are only a drop in the bucket. Enterprises and free-lancers from different sectors who have been fighting to stay alive are willing to introduce additional enhanced anti-epidemic measures proactively for a more effective infection control, with a view that their operations and business activities could be partially resumed and some breathing space could be provided for people.

Some days ago, I exchanged views with a dozen of young people to gauge their thoughts on the next Budget through online meeting.

Many enterprises and employees are indeed under tremendous pressure. By looking at the statistics, Hong Kong’s economy in Q3 last year has turned the tide of recession, and it is very likely that there will be an overall growth in 2021. However, the current situation is still very severe. For instance, according to the Official Receiver’s Office, almost 8700 applications for bankruptcy were received last year, representing an increase of 6.6% from the previous year. There were also about 450 filings of compulsory winding-up petition, which showed a 7.2% year-on-year increase. Hong Kong’s PMI fell back into contraction in last December, showing the pessimistic business sentiment of SMEs. Given the impact of the fourth wave of pandemic, the soon-announced unemployment rate will likely rise and surpass the 16-year-high peak, exerting extra pressure to the local labour market.

What is more worrying is that many business sectors, including retail and catering, which are expecting a peak in consumer spending in the upcoming Chinese New Year holiday period, will likely be seriously affected by the epidemic situation. During the consultation sessions on Budget, many trade representatives also raised their views that there may be more business closures and lay-offs after the Chinese New Year if the epidemic situation is not under control as soon as possible.

Over the past year, apart from fighting against the virus, the Government has continued to adopt a countercyclical fiscal policy, increase social investment and create jobs, with a view to buffering the impact of economic downturn on the job market. For example, the Government has set aside HK$ 6.6 billion to create 30 000 time-limited jobs in both the public and private sectors within two years, which require different skill set and academic background. Among the jobs created so far, more than 40% are frontline posts, such as workers and foremen for gardening, cleansing, pest control and supporting staff.

As fresh graduates in the recent one or two year may experience more difficulties in job hunting due to the social incidents and the epidemic, about 4 400 jobs are dedicated for fresh graduates under the Job Creation Scheme. Such jobs are designed to include career development elements and trainings so as to help the young people accumulating working experiences and acquiring related professional qualifications. For example, under the scheme run by the Development Bureau, employers are subsidised to recruit graduates from the fields of engineering, architecture, surveying, town planning and landscape architecture. The employers can consider how they can facilitate the graduates to gain working experience through those short term posts, while the graduates equipping themselves to acquire the related professional qualifications. There are also 5 100 posts which are suitable for young people. For example, the Financial Services and the Treasury Bureau will subsidise local Fintech companies, start-ups and other Fintech-related enterprises to create jobs.

I have been meeting with representatives from different sectors recently to gauge their views on the Budget. In one of the sessions, I exchanged views with a dozen of young people from different professional background. Some of them are undergraduate students, while some are junior professionals. Apart from career development and property ownership, which are common concerns among young people, they also talked about macro issues such as economic diversity, public finance, health services and population ageing. Not only did they raise concerns about the pressing social needs amid the epidemic, but also Hong Kong’s competitiveness and future development.

It is indeed important for us to tackle both present and future problems. Summing up the experiences we have gained in the past economic low tides, one of the lessons learnt is that we should not just focus on solving the present difficulties. We should also equip and prepare the society to face future challenges, seize the opportunities to restructure and upgrade amid crisis, and further promote the economic development of Hong Kong. In preparing the coming Budget, in addition to people’s needs under the epidemic, we also have to prepare and invest for the future. This has become particularly imminent given the recent technological advancement and the changes in consumption behaviour and business model which have been catalysed by the pandemic.

January 17, 2021