Only low-end jobs, requiring merely a middle school education, appear in a job advertisement bulletin yesterday. The unemployment rate from July to September rose to 3.4 percent, up slightly from the previous quarter. CNS

Hong Kong's unemployment rate rose to 3.4 percent in the third quarter this year - worse than expected - and economists and banks have shaved their employment-rate forecasts as the global economic downturn takes its toll on the territory.

The jobless rate from July to September was up from the 3.2 percent recorded in the June-August period, and the underemployment rate dropped from 1.9 percent to 1.8 percent, the Census & Statistics Department said yesterday.

Decreases were mainly seen in the sectors of transportation and decoration and maintenance.

The level was slightly higher than economists' predications of 3.3 percent.

The unemployment rate is a lagging indicator, and analysts expect it to climb in the months ahead with the economy heading for a sharp slowdown next year as exports and confidence are hit by a challenging global economic environment.

Citigroup expects the jobless rate to hit 5 percent next year, forecasting a surge in bankruptcies. JPMorgan cut its 2008 economic growth forecast to 3.4 percent from 4.6 percent and forecasts only a 1.3 percent expansion in 2009, which would be the worst performance since the dotcom bubble burst in 2001.

"Looking ahead, unemployment is likely to rise further in the near term. Some sectors are bound to be affected by a contraction in business triggered by the global economic crisis," said Matthew Cheung, secretary for labour and welfare.

He said the Labour Department will closely monitor the situation and stands ready to help the affected employees.

"The government will continue to enhance its employment services and the competitiveness of the local workforce through education, training and retraining services and job-search facilitation."

He added that, in the long run, the implementation of the major infrastructure projects will help create employment opportunities and economic benefits.

The jobless rate had held at 3.2 percent - its lowest level in more than a decade - for the past two months, reflecting a four-year economic boom that generated jobs across industries and brought unemployment down from a record high of 8.5 percent five years ago.

The number of unemployed people in the third quarter increased by around 4,900, quarter-on-quarter, from 129,100 to 134,000. Over the same period, the number of underemployed persons decreased by around 2,700, from 69,000 to 66,300, according to government statistics.

Chief Executive Donald Tsang said in his policy address last week that Hong Kong could face a recession.

The city could endure much lower growth for a few years, and Tsang announced plans to introduce a minimum wage to safeguard the incomes of people in low-end jobs.

(HK Edition 10/21/2008 page2)