The jobless rate for the April to June period is likely to pass 6 per cent and it may take Hong Kong a considerable amount of time to return to a level where there is almost full employment, the labour chief has warned.
Secretary for Labour and Welfare Law Chi-kwong on Saturday forecast the unemployment rate would stay in the 5 to 6 per cent range for a period of time as the city was reeling from a double whammy of months of social unrest sparked by a now-withdrawn extradition bill followed by the Covid-19 pandemic.
Law said a recovery would take time because the global economy had entered into a recession or close to a depression, and it would be a “happy” event to see the rate fall to 4 per cent.
“When we announce the unemployment rate for the April to June period in mid-July, it is very likely to go beyond 6 per cent,” he told a radio programme.
Should that be the case, it would be the ninth straight month of the rate increasing.
The jobless rate for the March to May period, released last week, rose 0.7 percentage points to 5.9 per cent – the highest in 15 years – compared with the February to April stretch.
But the pace of increases showed signs of slowing after rising 1 percentage point for the February to April period.
Law later said he was not hopeful about the outlook.
“When we look back at 1997, there was full employment in the first half of the year, which means the jobless rate was 3 per cent or below. But after the Asian financial crisis [in 1997-98], Sars [in 2003], a financial tsunami [in 2008], we only returned to the level of having full employment, an unemployment rate of 3 per cent, in 2017,” he said.
“So it takes a long time. When we look at the impact of the global pandemic, it may be more far-reaching.”
To safeguard jobs, the government launched an HK$81 billion Employment Support Scheme – a major part of the HK$137.5 billion coronavirus relief measures unveiled by Hong Kong’s leader, Chief Executive Carrie Lam Cheng Yuet-ngor, in April.
Under the 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.
On Monday, the government said it had received nearly 168,800 applications from bosses for the first phase of the scheme, which ended on June 14. The number accounted for about two-thirds of eligible employers – lower than Law’s earlier forecast of 70 to 80 per cent.
A government spokesman said a total of HK$11.4 billion was disbursed in two batches over the past two weeks, involving 59,500 employers and 490,000 employees.
Law noted some companies did not apply because they were worried their reputation would be hurt.
While details of the scheme’s second tranche, which aimed to disburse subsidies in September to cover wages for the three month to November, were not out yet, Law said he might adjust the policy to help more people.
“I may be able to adjust the system a bit to cover what it might have missed out,” Law said.
“As long as the information I have to handle is not too much and I can do it in a reasonable length of time, I can add some little things so that more employers or their employees, who might not be able to receive benefits in the first phase of the scheme, can be covered in the second phase.”