High unemployment may persist if local infections resurge

The OCBC Treasure Research sees jobless rate to stand between 7%-8% in the first half of the year.

Hong Kong’s jobless rate worsened within December 2020 to February 2021 after it hit 7.2%, the highest in 17 years, which the OCBC expects to remain high as it sees a relatively slow vaccine rollout.

“The unemployment rate may remain elevated in the coming months,” the OCBC Treasury Research reported.

This comes as it observed a relatively slow vaccination pace, which may trigger the resurge of local infections. In addition, it noted the employment support scheme, which has not yet resumed, may also drive high unemployment rate.

The OCBC added the revival of external demand driven by vaccine-induced normalcy, the distribution of e-consumption vouchers, and other relief measures may support the recovery of the local economy.

“As such, we still think it is possible for the jobless rate to peak in the range of 7%-8% in 1H and retrace lower gradually in 2H,” the report read.

The Census and Statistics Department (C&SD) reported last week that total employment dropped 20,500 to 2.61m within the three-month period. Underemployment, meanwhile, climbed to 4% as the retail sector, food and beverages service activities sector, as well as arts and entertainment remained affected by the pandemic.

Prior to this, unemployment rate reached 7% between November 2020 to January 2021, largely due to the fourth wave of COVID-19 outbreak.

The labour department had noted labour market pressure may be eased by the vaccination programme, which has inoculated some 354,400 individuals as of 21 March.

In a separate report, the C&SD said total employment slipped 4.7% in December, whilst vacancies likewise declined particularly in the arts and entertainment service (-67%), food and beverage service (52%) and professional and business service (-42%), amongst others.

In light of this, the government also organised the GBA Youth Employment Scheme Job Expo, which will be conducted on 23 and 24 March. Under the scheme, hired applicants will receive a monthly salary of at least $18,000.

Further, OCBC said the government’s plan to roll out three new policies that will enhance the financial integration in the Greater Bay Area will strengthen Hong Kong’s efforts in becoming an offshore RMB hub.

“This may help to cement Hong Kong’s role as an offshore RMB hub, facilitate free flow of human resources, capital and trade across the bay area,” OCBC said, adding this will also increase fintech development collaboration between China and Hong Kong.