Deep Dive: Hongkongers earning less money as unemployment rises

A new survey has found that Hongkongers earned less in the second quarter of this year compared to the previous three months. Meanwhile, the number of unemployed and underemployed people also rose.

The “Quarterly Report on General Household Survey” was published in late August by the Census and Statistics Department. It showed that the median monthly income for residents fell by HK$300 (US$38) from HK$21,400 in the first quarter to HK$21,100 in the second. These figures excluded foreign domestic helpers.

While the labour force grew by 8,900 people to 3,474,400 over the same period, 114,700 individuals were unemployed in the second quarter. This was an increase of 3,000 from the previous three months.

Businesses in construction, retail, accommodation and food services were hit the hardest. Their unemployment rate was higher than the average rate of 3 per cent.

The number of underemployed residents also rose by 4,500, reaching 44,500 during the same period.

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On the same day, UK-based consultancy Willis Towers Watson released a study that said nearly 40 per cent of Hong Kong companies had a smaller payroll budget for the financial year ending in March than they did last year. This is a jump from the 21 per cent reported a year ago.

Another survey conducted in May by the Hong Kong Small and Medium Enterprises Association and Junior Chamber International Hong Kong showed that 70 per cent of such companies said their business had fallen below pre-pandemic levels.

Hong Kong has seen many shops, restaurants, and cinemas close because of the sluggish economy.

Last month, the Hong Kong Monetary Authority set up a new task force to look into small and medium companies that were having trouble with banks over their loan repayments.

Chief Executive John Lee Ka-chiu said it was normal for new businesses to replace old ones. He added that the economy was expected to improve next year.

Staff writer

Question prompts

1. How did the median monthly income for Hongkongers change from the first quarter to the second quarter of this year, according to News?

2. What sectors in Hong Kong experienced the most significant impact in terms of unemployment rates, as reported in the survey?

3. Using News, Chart and Glossary, explain THREE problems that workers in Hong Kong are facing because of the city’s slow economy.

Question prompts

1. List TWO observations from the chart about the state of Hong Kong households from the first quarter to the second quarter of 2024.

2. How do the median monthly income and unemployment rate numbers reflect Hong Kong’s sluggish economy? Explain using News, Chart and Glossary.

Question prompts

1. What do the light bulbs and briefcases symbolise in Illustration? What message is it trying to convey regarding AI and today’s competitive job market?

2. What is the role of AI in today’s workforce? Why are businesses looking to hire tech talent and data scientists? Use Issue, Illustration and your own knowledge to support your answer.

• Average Hong Kong worker can expect a 4 per cent pay hike, one of the lowest figures in the region, though data science professionals could see higher increases

• Tech talent with skills in artificial intelligence (AI) and machine learning are clocking salary growth in markets, according to WTW

Hong Kong employees looking for sizeable pay increases could be disappointed as companies struggle with inflationary pressures, cost cuts and weaker earnings, according to a study by the UK-based consultancy Willis Towers Watson (WTW).

Nearly 40 per cent of Hong Kong companies have a smaller payroll budget for the current financial year ending March than they did last year, compared with 21 per cent a year ago. The outlook for next year is equally conservative, the firm said in a report released last month.

WTW has projected an overall pay hike in Hong Kong of 4 per cent in 2025, the same as the past two years, and the second-lowest in the Asia-Pacific region after Japan’s 3 per cent estimated increase.

But the city’s data science and business intelligence professionals could see an increase of as much as 8.3 per cent amid surging demand for such talent “as these roles are needed across industries”, the study said.

Hong Kong companies are also looking for talent in human resources, particularly for key roles in ESG (environment, social and governance), as well as employee well-being and productivity.

“Employers are more conservative with their salary budgets as they look to longer-term stability in their employee base,” WTW said.

“Those organisations that lowered salary budgets cited inflationary pressures, concerns related to cost management and weaker financial results as the leading causes.”

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The negative outlook many firms hold is reflected in Hong Kong’s economic performance. Although the economy grew by 3.3 per cent year on year in the second quarter, this increase was mainly supported by exports.

The economy also faces challenges from elevated interest rates that are at a 23-year high and the slowdown in China. These have been reflected in the disappointing second-quarter results posted by many listed companies.

One major noticeable trend is that tech talent with skills in artificial intelligence (AI) and machine learning are clocking double-digit salary growth in many markets, according to WTW.

“Organisations around the world are willing to invest heavily in skilled professionals who can drive innovation and growth in the AI space, giving companies the upper hand in today’s competitive business environment,” said Edward Hsu, rewards data intelligence leader at WTW.

“As AI and other technologies become more prevalent, employers need to consider how they can leverage these for their business, and whether they ought to train their workforce for it or recruit digital talent to facilitate digital transformation.”

Staff writer

Question prompts

1. List THREE reasons why Hong Kong employees looking for pay increases could be disappointed.

2. According to the study by WTW, what factors contribute to the reduced salary budgets and conservative outlooks reported by Hong Kong companies?

3. Which professions in Hong Kong are likely to receive higher pay increases compared to the overall average? Why might these jobs have an edge in today’s job market? Explain using Issue, Glossary and your own knowledge.

• underemployed: when a person has a job but does not have enough work. They often do not get to use their skills and education, work part-time but would like to work full-time, and don’t earn much money.

• median monthly income: the middle figure when numbers are arranged from lowest to highest. In this case, half of the reported incomes are higher, and half are lower than this value.

• sluggish economy: the word economy describes how a country or place is doing in terms of making and selling goods and how much money it has. A sluggish economy is growing very slowly. Unemployment may be higher, and people are spending less money.

• environment, social and governance (ESG): practices related to sustainability and ethical issues within an organisation

News:

1. The median monthly income in the second quarter of this year dropped by HK$300 compared to the first quarter, going down from HK$21,400 to HK$21,100.

2. The construction, retail, accommodation and food services sectors were the hardest hit.

3. Because of Hong Kong’s slow economy, many people have lost their jobs, some people are not making enough money to make ends meet and many business owners have had to close their shops.

Chart:

1. The underemployment rate edged up from 1.1 per cent in Q1 2024 to 1.2 per cent in Q2 2024 / The median monthly household income was HK$29,700 in Q2 2024, HK$300 lower than the first quarter. (accept other reasonable answers)

2. Hong Kong has suffered a wave of closures of shops, restaurants and cinemas amid a sluggish economy, and this is reflected in the unemployment rate. The lower median monthly income could be a reflection of businesses that can no longer pay their workers. (accept other reasonable answers)

Illustration:

1. The light bulbs in the illustration symbolise new job opportunities, while the work bags represent existing jobs that are at risk of being replaced by AI. This illustration highlights how AI unlocks new career opportunities, and how the fast-growing AI space could potentially replace existing jobs.

2. AI is highly valuable tool favoured by employers around the world, as it can be used to innovate businesses and create higher efficiency and growth. Many employers have been recruiting digital talents to facilitate this AI transformation. One major trend is that tech talent with skills in artificial intelligence (AI) and machine learning are clocking double-digit salary growth in many markets. Edward Hsu, rewards data intelligence leader at WTW, said that organisations around the world are willing to invest heavily in skilled professionals who can drive growth in the AI space to give companies the upper hand.

Issues:

1. inflationary pressures / cost cuts / weaker earnings

2. According to WTW, those organisations that lowered salary budgets cited inflationary pressures, concerns related to cost management and weaker financial results as the leading causes. The economy also faces challenges from elevated interest rates that are at a 23-year high and the slowdown in China.

3. Data science and business intelligence professionals could see an increase of as much as 8.3 per cent. There is high demand for such talent across industries. Tech talent with skills in artificial intelligence (AI) and machine learning are also clocking double-digit salary growth in many markets, according to WTW. These jobs have an edge because they can drive growth and efficiency for businesses.