Hiring expectations for the services sector have declined over the last quarter, according to a survey.

Analysts suggest Hong Kong's new minimum wage law is at least partly responsible.

The third quarter hiring expectations emerge from the Net Employment Outlook (NEO), calculated by subtracting the percentage of employers who plan to cut jobs from the number who plan to add staff.

In the Services Industry the NEO stands at 14 percent, according to the Manpower Employment Outlook Survey released on Tuesday.

While the number is still in the double digits, this year's figure reflects a drop of 6 percentage points from the last quarter and 7 points from last year, the ManpowerGroup said.

Services is the only industry that reported both quarter-on-quarter and year-on-year declines in hiring expectations.

"Weaker employer hiring intentions in the services sector, including catering and cleaning services, are primarily attributable to food price inflation and the introduction of the statutory minimum wage law in May. Employers have become cautious about adjusting operating costs and staffing levels to offset the minimum wage increases," said Lancy Chui, managing director of ManpowerGroup's Hong Kong, Macao and Vietnam branch.

Chui added that the transportation and utilities industry also has been affected by the minimum wage law.

The NEO of the industry for the third quarter dropped 2 percentage points from last quarter to 12 percent.

But the saving grace is that despite the quarterly decline the numbers are still 8 percent higher than the comparative figure for last year.

Ip Wai-ming, lawmaker from the Hong Kong Federation of Trade Unions, however, told China Daily that the Labour Department has actually received more job requests from employers since the minimum wage came into force.

"The services industry, especially the catering industry, has already cut down enough staff members. Now the biggest problems are increasing food prices and rents," he said.

"Whether the sector is going to offer more jobs in the second half of this year depends largely on the inflation level."

Felis Leung, vice director of the Hong Kong Federation of Services Unions, echoed Ip.

He said that the minimum wage has its strongest influence on low level services which offer the least competitive wages.

"We've actually seen workers transferring to higher level jobs, which resulted in many job vacancies in the lower end," he said.

Leung said the drop in the NEO is "temporary" as the services industry is experiencing a "transitional period".

He predicted that after a few months, the impact of the minimum wage law will recede and that the long-term job prospects will depend on external factors such as rents and land prices.

Manpower surveyed 806 employers in Hong Kong, asking them whether they are going to increase or reduce the number of employees from July to September.

Hong Kong's overall NEO stands at 20 percent, with 24 percent of employers surveyed expecting to add staff over the next three months.

Among them, employers from the wholesale and retail trade sector reported the strongest hiring plans with a 26 percent NEO, followed by the finance, insurance and real estate industry (25 percent) and the mining and construction industry (21 percent). The manufacturing sector forecast a steady NEO of 16 percent.

Chui said these two-digit NEOs have shown optimism among employers, hand in hand with the first quarter GDP growth.

"Hong Kong's GDP expanded briskly, by 7.2 percent over a year earlier. That has helped to strengthen the job market, pushing down the latest unemployment rate to 3.5 percent, close to the record low of 3.4 percent, since the global financial turmoil began," she said.

Chui also predicted that the latest unemployment rate, which is coming out next week, will remain steady, despite the inflow of university graduates into the job market.

Hong Kong is one of the 39 countries and territories that take part in the Manpower Employment Outlook Survey.

India, Taiwan, Brazil and Turkey showed the most affirmative hiring expectations worldwide.

Employers in the economically troubled countries of Spain, Greece, Italy and Ireland reported the weakest and only negative NEOs globally.

China Daily

(HK Edition 06/15/2011 page1)