City's jobless rate at lowest level in more than two years

The labor market continues to improve as the city's jobless rate fell to its lowest level in more than two years.

The rate for the three months ended Jan 31 was 3.8 percent, down a further 0.2 percent from the 4 percent recorded during the previous three-month October-December reporting period, the Census and Statistics Department said on its website Monday.

It is the lowest figure reported in the past 27 months. In Oct 2008, the city's unemployment rate stood at 3.6 percent, the floor for more than 10 years since May 1998.

"Unlike the US where the jobless rate still hangs around 9 percent, Hong Kong's job market has basically returned to the condition it was in before the economic crisis," said Irina Fan, senior economist at Hang Seng Bank.

The city's total employment increased for the eighth consecutive month to an all-time high of 3.58 million followed by sustained economic growth and job creation, Secretary for Labour and Welfare Matthew Cheung Kin-chung said, commenting on the latest figure.

As many as 98,900 jobs were created in the labor market in the past eight months and the number of people unemployed has fallen notably to 130,200 - the lowest level since the June to August reporting period in 2008.

New jobs were mainly seen in decoration, repair and maintenance for buildings, information and communications as well as transportation sectors.

Cheung said the strong growth in total employment entering 2011 was mainly due to the robust business activities and labor demand in the run-up to the lunar new year holidays.

"It is customary for employers to review and if necessary adjust their staffing position after the holidays," said Cheung. "According to the latest vacancy data and business survey feedback, employers generally are still adopting a positive attitude towards hiring. More new jobs are therefore expected."

The underemployment rate remained unchanged at 1.8 percent for the three months through Jan 31 from the fourth quarter last year.

Hang Seng Bank's Fan forecasts a buoyant job market outlook for the near term, expecting the jobless rate to hover between 3.8 to 4 percent this year.

She added that there are two major challenges to the labor market this year. The expected inflation hike will push wages up and increase costs for employers, which might stymie their desire to expand recruitment .

Slower economic growth this year is also likely to pull down profits of the employers, Fan said, adding that it will also bring about uncertainty to the employment environment in 2011.

Hong Kong's gross domestic product expanded at an annual pace of 6.8 percent in the third quarter. Hang Seng Bank estimates the full-year growth in 2010 to stand between 6.5 and 7 percent and has forecast economic expansion to grow at a more moderate pace of around 5 percent this year.

The city's first minimum wage rate, which was set at HK$28 per hour, will also increase business costs and restrain hiring, Hang Seng Bank's Fan added. The ordinance will take effect May 1.

China Daily

(HK Edition 02/22/2011 page2)