Coronavirus: Hong Kong finance chief warns jobless rate will be worse than after global financial crisis

Phila Siu

Hong Kong’s latest unemployment rate is expected to be worse than after the global financial crisis more than a decade ago while the number of people without work could soar to the highest in 15 years, the finance chief has warned.

Financial Secretary Paul Chan Mo-po’s bleak assessment came a month after the government announced that the unemployment rate rose to 5.2 per cent in the three months to April, the highest in more than a decade, or 1 percentage point above the 4.2 per cent recorded for the January to March period.

“The recent employment situation continues to deteriorate. From the way it’s going, the unemployment rate will unavoidably rise further from the 5.2 per cent recorded in April and be worse than during the 2009 financial tsunami,” Chan wrote in a blog post published on Sunday.

“The number of jobless people could be the highest in 15 years.”

Financial Secretary Paul Chan. Photo: Nora Tam

About 202,500 people were unemployed in the February to April period, an increase of 40,300 from the previous rolling three-month interval.

The employment landscape has not been this poor since 2009, when the unemployment rate hit 5.2 per cent in the August to October period.

Hong Kong’s economy was hit hard by the anti-government movement last year and then battered by the coronavirus pandemic since early this year. The city’s economy shrank 8.9 per cent year on year in the first quarter, the worst decline on record.

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Amid the Covid-19 pandemic, the government has limited tourist arrivals and imposed social-distancing rules. Restaurants, bars and many different kinds of businesses have been struggling to stay afloat.

To support businesses and workers, the government has launched the Employment Support Scheme under which the authorities 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 (US$1,154).

But unionists have instead suggested an unemployment subsidy scheme so that the money will go directly to jobless workers.

“For the retail, catering and service sectors, it has been very difficult to get through the economic winter in the past year. They urgently need a window to improve their businesses,” Chan said.

“For the workers, the most important thing is to keep their jobs.”

The minister believed that a HK$10,000 government handout, to be given to all Hong Kong permanent residents from next month, would drive local consumption. The scheme was expected to cost HK$71 billion.

The retail business is among the sectors struggling in Hong Kong. Photo: Nora Tam

Chan said the coronavirus outbreak was still not under control in some overseas countries and thus Hongkongers would for now be staying put and spending money in the city.

The financial secretary had previously warned that the economic impact of the coronavirus crisis was bigger than when the outbreak of severe acute respiratory syndrome (Sars) hit the city 17 years ago. The unemployment rate reached an all-time high of 8.5 per cent in June 2003.

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The city’s banks, from new digital lenders to traditional powerhouses of the sector, are fighting it out to lure 7 million permanent residents into using their platforms to get the HK$10,000 handout.

Newly launched virtual lenders such as Airstar and the city’s three note-issuing banks, HSBC, Standard Chartered and Bank of China Hong Kong, have entered the fray, offering high interest rates, lucky draw prizes and other incentives.

This article Coronavirus: Hong Kong finance chief warns jobless rate will be worse than after global financial crisis first appeared on South China Morning Post

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