Companies in Hong Kong and across Asia are more hesitant to hire staff in anticipation of a possible recession triggered by the US sub-prime crisis, an employment survey showed.

Hong Kong companies are already more cautious in offering higher pay to executive staff, the survey conducted by human resources firm Hudson Hong Kong showed.

Unemployment rate in the city between January and March has increased to 3.4 percent from 3.3 percent between December and February, the Census and Statistics Department announced.

Total employment decreased by around 6,400 to 3,534,000, while the number of unemployed persons increased by 6,900 to 118,900.

The government explained that the rise in unemployment was because of slackened business activity after the lunar new year.

Secretary for Labour and Welfare Matthew Cheung said the government will closely monitor the impact on employment caused by the US economic slowdown and the volatility of the global financial markets.

The survey showed that 57 percent of the 740 executives interviewed expected to increase hiring in their companies, which is one percentage point down from the same survey in the first quarter.

The survey conducted in 2007 showed the number of executives planning to hire more staff increased from 49 percent in the third quarter to 54 percent in the fourth quarter.

Hudson Hong Kong manager Gina McLellan said while growth in employment is expected in 2008, there will not be any drastic changes as companies are still concerned with the economic development in the US and Europe.

The survey also showed that only 20 percent of the executives expected Hong Kong to experience a recession in the next six months.

Among them, the banking and financial services sector has the largest percentage of worry for a recession, followed by 56 percent in the consumer industry and 58 percent in the manufacturing industry.

According to the survey, in case of a recession, 40 percent of the respondents anticipated their companies' hiring plans to be affected, while 84 percent expected their companies to freeze headcount.

Hudson accounting manager Kensy Sy said some financial and banking companies were reluctant to offer job seekers their expected salary.

"Some applicants may ask for a 25 percent pay rise when they switch jobs," he said. "But the new employers may only offer a 15 percent increase."

Such cautious stance is adopted by many other Asian countries.

While only 14 percent of the executives on the mainland expected a recession, the number of respondents expecting to hire staff have dropped from 61 percent in the first quarter to 52 percent because of product safety concerns, McLellan said.

The proportion of respondents predicting an employment increase in Japan has dropped from 66 to 55 percent. More than 40 percent of the executives in Japan expected a recession.

In Singapore, only 26 percent of the executives expected a recession. Among these respondents, 58 percent said an economic downturn will affect their hiring plans.

(HK Edition 04/18/2008 page1)