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Report on employment trends and data availability in Hong Kong, China (HKC)

1. Overview of economic and demographic trends affecting employment

The population of Hong Kong has increased from 5.18 million in mid-1981 to mid-7.24 million in

2014. The fast population growth in the early 1980s was mainly attributable to a high level of

entrants from China. From the mid-80s to early 90s, population recorded rather low annual growth

rate, because the number of emigrants offset the effect of immigrants from China. Population

growth resumed from 1993 to 1996, as many people who had emigrated in early years returned to

Hong Kong. The population growth has since remained largely steady, save for the meagre decline

recorded in 2003.

Hong Kong’s population grew by 0.6% per annum over the past decade, and is now facing the

challenges of an ageing population, a shrinking labour force and declining productivity. The latest

figures suggest that by 2041, the dependency ratio will be 1.8, up from 4.7 in 2014. This means

approximately one out of three persons will be an elderly in 2041. The imminent consequence will

be the dwindling labour force, as more people retire and fewer young people enter the labour

market. The total labour force is projected to peak in 2018 and set to decline until the early 2030s.

Besides, Hong Kong is a service-oriented economy, as employment of the service industries accounts

for almost 90% of the total employment. During 2003 to 2013, the employment share of the service

industry within the total employment increased by 2.2 percentage points. On the other hand, the

employment share of manufacturing fell from 5.0% to 2.9% over the same period. Specifically, the

Four Key Industries (viz. financial services, tourism, trading and logistics, and professional and

producer services) in the Hong Kong economy employed 1 764 200 persons, contributing 47.3% of

total employment in 2013. On the other hand, selected emerging industries (viz. cultural and

creative industries, medical services, education services, innovation and technology, testing and

certification services and environmental industries) employed 450 250 in 2013, accounting for 12.1%

of total employment.

The future of our city hinges on the quality of our people, which is one of our most valuable assets.

The Government has spared no effort on improving the quality of manpower, while striving to

broaden our economic base and steer the development towards high value-added activities.

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2. Current data collections

2.1 Main data collections

Collection name

Frequency with which data collection takes place

First year for which data are available

How often results are published

How data can be obtained Main variables collected

General Household Survey (GHS)

Monthly 1985 Monthly http://www.censtatd.gov.hk/hkstat/sub/so200.jsp http://www.censtatd.gov.hk/hkstat/sub/sp200.jsp http://www.censtatd.gov.hk/hkstat/sub/sp200.jsp?productCode=B1050001

Demographic characteristics: age, sex, marital status, educational attainment, relationship to household head

Main labour force characteristics: employment status Employed persons Industry, occupation, hours of work, employment earnings Unemployed persons Duration of unemployment, previous industry, previous occupation

Household characteristics: household size, type of housing, tenure of accommodation, household income

A list of data topics can be obtained in Part II of the publication “Quarterly Report on General Household Survey” which can be downloaded from: http://www.censtatd.gov.hk/hkstat/sub/sp200.jsp?productCode=B1050001

Quarterly Survey of Employment and Vacancies (SEV)

Quarterly Q2 1980 Quarterly http://www.censtatd.gov.hk/hkstat/sub/sp452.jsp?productCode=B1050003 http://www.censtatd.gov.hk/hkstat/sub/sp452.jsp

Establishment characteristics: industry, employment size

Employment characteristics: paid/unpaid, sex Vacancies characteristics: occupation

Quarterly Employment

Quarterly Q1 1976 Quarterly http://www.censtatd.gov.hk/hkstat/sub/sp452.jsp?productCode=B1050004

Construction site characteristics: end-use of construction project, employment size

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Survey of Construction Sites (Site Survey)

http://www.censtatd.gov.hk/hkstat/sub/sp452.jsp

Employment characteristics: sex Vacancies characteristics: occupation

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2.2 Method for identifying shortages and surpluses of labour and qualified workers

We do not have definitions on “shortages” and “surpluses”. Nevertheless, statistics on number of

vacancies by industry and broad occupation, and number of unemployed persons by previous

industry and occupation may be used as ballpark estimates for shortage and surplus of labour and

qualified workers respectively.

2.3 Method for projecting future employment

The Government of the Hong Kong Special Administration Region (HKSAR) conducts manpower projections (but not employment projections) from time to time to project the broad trends of its future manpower supply and requirements at the macro level in the medium term, as well as the potential manpower imbalances at different education levels. The manpower statistics in these projections exclude foreign domestic helpers. The latest set of projections, namely the Manpower Projection to 2022 (MP2022), adopted 2012 as

the base year and a projection period up to 2022. It comprises three major components –

Manpower Supply Projection (MSP), Manpower Requirement Projection (MRP) and Manpower

Resource Balance (MRB). MSP includes analyses by age, sex and education level, while MRP covers

analyses by economic sector, occupation group and education level. MRB assesses whether the

future manpower is in balance, surplus or shortfall in relation to the overall economy and at

different education levels.

Methodology used to develop the projections

The methodology of MP2022 is summarised as follows. Manpower Requirements The manpower requirements of various sectors and industries in the base year reflected the actual situation of the labour market in 2012, and were worked out primarily on the basis of HKSAR Census and Statistics Department (C&SD)’s manpower statistics, taking into account job vacancies. The projected manpower requirements of various sectors and industries in 2022 were compiled by drawing on the relevant historical manpower trends; the findings of an extensive consultation conducted with businesses, trade associations and academics on the outlook for the future manpower requirements of various sectors and industries; the survey findings on employers’ views on their future manpower needs; as well as the views of relevant government bureaux/departments responsible for manpower development programmes and statutory training bodies. Manpower Supply The actual local manpower supply in the base year of 2012 was compiled on the basis of the labour force statistics of the C&SD. The projected manpower supply by education level in 2022 was worked out by drawing reference to a wide range of statistics, such as Hong Kong Population Projections 2012–2041, Hong Kong Labour Force Projections 2013 – 2041 and statistics of the educational profile of Hong Kong people. Manpower Resource Balance MRB refers to the quantitative difference between MSP and MRP and provides a measure to assess whether the manpower will be in balance, surplus or shortfall in 2022.

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Details of the methodology of Manpower Projection to 2022 are set out at the Report, which is

available at http://www.lwb.gov.hk/report/mp2022_en.pdf.

Time period covered by projections

MP2022 adopted 2012 as the base year with a projection horizon of 10 years up to 2022. The HKSAR

Government conducts manpower projections from time to time, such as following the completion of

a population census/by-census.

Industries and occupations covered by the projections

MP2022 adopts the 12 conventional economic sectors as defined by the Hong Kong Standard Industrial Classification Version 2.0 (a standard framework used by the HKSAR Census & Statistics Department for compiling sectoral statistics) in analysing sector-specific manpower requirements. These sectors together make up the whole economy of HKSAR, covering Agricultural, fishing and quarrying; Manufacturing; Electricity, gas, water, and waste management; Construction; Import, export, wholesale and retail trades; Accommodation and food services; Transportation, storage, postal and courier services; Information and communications; Financial services; Real estate; Professional and business services; and Social and personal services. The occupation groups adopted in MP2022 are classified into nine categories, namely Managers and

administrators; Professionals; Associate professionals; Clerical support workers; Service and sales

workers; Agricultural and fishery workers; Craft and related workers; Drivers, plant and machinery

operators, and assemblers; and Elementary occupations.

Coverage of future demand for qualified workers

MP2022 adopts a six-level education classification, namely, Lower secondary and below, Upper

secondary, Diploma (including Craft), Sub-degree, First degree and Postgraduate, in analysing the

findings of MSP and MRP. These education levels largely reflect the formal educational structure of

HKSAR.

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3. Current labour market conditions

3.1 Recent trends in educational attainment of the population

The numbers of students enrolled in primary and secondary school dropped considerably by 31.5%

and 15.9% over 2003 respectively to 320 918 and 398 372 in 2013. As for post-secondary education,

enrolment in the University Grants Committee (UGC) funded institutions was 193 415 in 2013, more

than doubled (+114%) that in 2003. Meanwhile, enrolment in the Vocational Training Council (VTC)

was 59 793 in 2013, broadly similar to that in 2003.

Enrolment in the UGC funded programmes rose by 18.0% during 2003-2013 to 95 456 in 2013.

Analysed by academic programme category, increases in enrolment were almost across the board.

The five categories with the largest increases in enrolment were Studies allied to Medicine and

Health (+98.5%), Mathematical Sciences (+89.2%), Humanities (+77.9%), Arts, Design and Performing

Arts (+51.6%), and Medicine (+46.1%).

Over the same period, graduates of the UGC funded programmes increased in Studies allied to

Medicine and Health (+50.5%), Humanities (+32.2%), and Mathematical Sciences (+23.8%).

Note: (^): including craft courses

Source: GHS, C&SD

26.3

16.8

35.0

21.919.6

15.1

35.4

29.8

0

5

10

15

20

25

30

35

40

Primary education and

below

Lower secondary

education

Upper secondary

education^

Post-secondary

education

2004

2014

%

Chart 3.1a : Distribution of population aged 15 and over by educational attainment in 2004 and 2014

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Note: (^): including craft courses

Source: GHS, C&SD

Education upgrading in Hong Kong’s population and labour force continued during 2004-2014, with a

clear shift from lower secondary and below education to post-secondary education level (Charts

3.1a & b). Within the post-secondary education level, the share of labour force attaining a degree

level rose from around 66% in 2004 to around three quarters in 2014. The changes in educational

composition of the labour force was largely driven by the Government’s concerted effort to promote

post-secondary education in view of the growing demand for well-educated and skilled workers in a

knowledge-based economy.

3.2 Recent trends in employment by occupation

During 2004-2014, employment grew by 14.5% in overall terms, with a bigger rise observed in

higher-skilled workers (+29.1%) (Chart 3.2a). Within the higher-skilled segment, employment

growth was across the board, notably managers and administrators (+40.8%). On the other hand,

varied movements were seen across the lower–skilled occupations. More visible growth was seen

among elementary occupations (+23.3%) and service and sales workers (+22.6%), while more

noticeable decline was found among plant and machine operators and assemblers (-23.9%).

The higher-skilled segment accounted for a rising share of total employment, up from 33.6% in 2004

to 37.9% in 2014, as a result of the faster employment growth vis-à-vis the lower-skilled segment

over the past ten years (Chart 3.2b). More specifically, managers and administrators, and

professionals comprised a larger share within the higher-skilled segment (Chart 3.2c), while service

and sales workers, and elementary occupations contributed greater proportions within the lower-

skilled segment (Chart 3.2d).

14.817.6

39.8

27.7

9.8

14.8

39.136.4

0

5

10

15

20

25

30

35

40

45

Primary education and

below

Lower secondary

education

Upper secondary

education^

Post-secondary

education

2004

2014

%

Chart 3.1b : Distribution of labour force by educational attainment in 2004 and 2014

8

29.1

40.8

32.7

22.4

7.4

-4.8

22.6

-6.1

-23.9

23.3

14.5

-30 -20 -10 0 10 20 30 40 50

Higher-skilled workers

Managers and administrators

Professionals

Associate professionals

Lower-skilled workers

Clerical support workers

Service and sales workers

Craft and related workers

Plant and machine operators and assemblers

Elementary occupations

Total

Chart 3.2a : Cumulative employment growth by occupational group during 2004-2014

%

Higher-skilled workers

Lower-skilled workers

Total

[-25 800]

[-16 200]

[-55 900]

[+320 200]

[+114 400]

[+68 800]

[+136 900]

[+160 100]

[+116 200]

[+141 800]

[+475 700]

33.6

8.66.4

18.6

66.1

16.6 15.7

8.2 7.1

18.5

37.9

10.57.5

19.9

62.0

13.816.8

6.74.7

20.0

0

10

20

30

40

50

60

70

Hig

her

-sk

ille

d

wo

rker

s

Man

ager

s an

d

adm

inis

trat

ors

Pro

fess

ion

als

Ass

oci

ate

pro

fess

ional

s

Lo

wer

-skil

led

wo

rker

s

Cle

rica

l su

pp

ort

wo

rker

s

Ser

vic

e an

d s

ales

wo

rker

s

C

raft

and

rel

ated

wo

rker

s

P

lan

t an

d m

ach

ine

op

erat

ors

and

asse

mb

lers

Ele

men

tary

occ

up

atio

ns

2004

2014

%

Chart 3.2b : Shares of total employment by occupation in 2004 and 2014

Hig

her

-sk

ille

d

wo

rker

s

Lo

wer

-sk

ille

d

wo

rker

s

9

Note: (^): including craft courses

Source: GHS, C&SD

25.5

19.1

55.4

27.8

19.7

52.6

0

10

20

30

40

50

60

Managers and

administrators

Professionals Associate professionals

2004

2014

%

Chart 3.2c : Shares of employment in higher-skilled segment in 2004 and 2014

25.123.7

12.310.8

28.1

22.2

27.1

10.8

7.7

32.2

0

5

10

15

20

25

30

35

Clerical support

workers

Service and sales

workers

Craft and related

workers

Plant and

machine operators

and assemblers

Elementary

occupations

2004

2014

%

Chart 3.2d : Shares of employment in lower-skilled segment in 2004 and 2014

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3.3 Recent trends in employment by industry

During 2004-2014, employment growth was observed in a number of sectors, most notably financing

and insurance (52.2%), professional and business services (excluding cleaning and similar activities)

(43.9%), and accommodation services (39.6%). Nevertheless, more noticeable declines in

employment were found in the manufacturing (-35.6%) and public administration (-17.4%)

(Chart 3.3a).

Import/export trades and wholesales sector still accounted for the largest share of total employment

in Hong Kong in 2014 despite a visible fall in its share from 16.7% in 2004 to 13.4%, followed by the

retail (9.2%) and construction (8.2%) sectors. During the same period, more discernible increases in

share of total employment were seen in the financing and insurance, professional and business

services (excluding cleaning and similar activities), and retail sectors, while more visible declines

were found in the manufacturing and public administration sectors (Chart 3.3b).

-35.6

16.7

-7.8

26.0

39.6

15.6

6.3

52.2

31.6

43.9

-17.4

30.4

14.5

-40 -20 0 20 40

Manufacturing

Construction

Import/export trades and wholesale

Retail

Accommodation services

Food and beverage service activities

Transportation and storage

Financing and Insurance

Real estate

Professional and business services

(excl. cleaning & similar act.)

Public administration

Education

Overall

Chart 3.3a : Cumulative employment growth by industry section during 2004-2014

%

Overall

[-72 200]

[-42 700]

[-22 900]

[+43 900]

[+71 100]

[+13 100]

[+32 700]

[+18 000]

[+81 600]

[+37 000]

[+83 200]

[+48 000]

[+475 700]

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Note: (^): including craft courses

Source: GHS, C&SD

6.2

8.0

16.7

8.4

1.0

6.4

8.7

4.83.6

5.8

4.04.8

3.5

8.2

13.4

9.2

1.2

6.5

8.1

6.3

4.1

7.3

2.9

5.5

0

2

4

6

8

10

12

14

16

18M

anu

fact

uri

ng

Co

nst

ruct

ion

Imp

ort

/ex

po

rt t

rades

and

wh

ole

sale Ret

ail

Acc

om

mod

atio

n

serv

ices

Fo

od a

nd

bev

erag

e

serv

ice

acti

vit

ies

Tra

nsp

ort

atio

n a

nd

sto

rag

e

Fin

anci

ng a

nd

Insu

ran

ce

Rea

l es

tate

Pro

fess

ion

al a

nd

bu

sin

ess

serv

ices

…

Pu

bli

c ad

min

istr

atio

n

Ed

uca

tio

n

2004

2014

%

Chart 3.3b : Shares of total employment by industry section in 2004 and 2014

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3.4 Occupations and industries which are currently experiencing a shortage of suitable

workers

Analysing the number of job openings in private sector establishments per 100 job-seekers suggests

that the manpower resource balance remained largely tight lately. The overall vacancy-to-

unemployed ratio rose slightly further from 59 in 2013 to 60 in 2014 for the fifth consecutive year,

with the ratio of the lower-skilled segment increasing from 64 to 66 while that of the higher-skilled

segment staying at 81. Manpower resource balance was particularly tight among professionals (99),

services and sales workers (99), as well as associate professionals (95). Analysed by economic sector,

manpower shortages were more apparent in human health activities (168), residential care and

social work activities (151), wholesale (121), accommodation services (121), financing and insurance

(118), food and beverage services (111), and professional and business services (excluding cleaning

services) (106) sectors for which the corresponding ratios all exceeded 100 for 2014 as a whole.

3.5 Occupations and industries which are currently experiencing a surplus of suitable workers

Generally, the prevailing labour market in Hong Kong is rather tight (see Section 3.4 above).

3.6 Recent trends in the employment of people with different levels of educational

attainment

Note: (^): including craft courses

Source: GHS, C&SD

0

2

4

6

8

10

12

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Primary education

and below

Lower secondary

education

Upper secondary

education^

Post-secondary

education

Chart 3.6 : Unemployment rate by educational attainment during 2004-2014

%

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The unemployment rate is generally lower for those with higher level of educational attainment.

The unemployment rate for those who had attained post-secondary education, who were much

better cushioned during economic downturn, was persistently lower than those with lesser

education during 2004-2014. The unemployment rates for those with lower secondary education,

and primary and below education were broadly similar during 2004 - 2008, yet that for those with

primary and below education became consistently lower after 2008, conceivably reflecting the

particularly tight manpower resource balance for the grassroots jobs. The positive relationship

between educational attainment and job security has been observed in Hong Kong for a number of

years. As Hong Kong continues to develop as a diversified and knowledge-based economy, the

employment prospect for the educated workforce is expected to remain favourable at large.

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4. Expected future labour market trends

4.1 Current expectations of future trends in employment in different industries

Following the continuous restructuring towards a service-oriented economy over the past three

decades, Hong Kong will strive to move further up the value chain and move towards a knowledge-

based economy. Against this backdrop, our future employment will remain predominated by

workers in the services sector.

In particular, leveraging on Hong Kong’s strategic position in the region, and its competitive edge in

infrastructure and institutions, the Four Key Industries, namely financial services, tourism, trading

and logistics, and professional services and other producer services, will continue to be the key

drivers of growth, and these should also be the major generators of jobs in future.

For instance, while financial services and professional and producer services generate mainly higher-

skilled jobs, tourism and its related sectors such as retail, transportation, and accommodation and

food services employ a larger proportion of lower-skilled workers, thereby creating diverse

employment opportunities for different strata of our people.

In addition, there are a number of other selected industries, namely cultural and creative industries,

medical services, education services, innovation and technology, testing and certification services,

and environmental industries, which have competitive advantages and growth potential. These

industries have actually enjoyed above-average growth in both value added and employment in the

past few years, and as a result seen a rising share in the overall GDP and total employment (9.1% of

GDP and 12.1% of total employment in 2013, compared to 7.4% and 11.0% in 2008). In this

connection, they are expected to be an important employment generator in the future, especially

for the higher-skilled segment given the knowledge-based nature of most of these industries.

4.2 Current expectations of future trends in employment in different occupations

Amid the continuous economic restructuring and human capital upgrading, the proportion of higher-

skilled workers (namely managers and administrators, professionals, and associate professionals)

has been rising over the past ten years. This trend is expected to continue in view of the high value-

added and knowledge-based nature of the Hong Kong economy, as well as the further development

of the pillar industries and emerging new industries.

On the other hand, lower-skilled workers (namely elementary occupations, service and sales workers,

clerical support workers, plant and machine operators, craft and related workers) still comprise over

60% of our total employment. Employment in some occupations in this segment (e.g. elementary

occupations, service and sales workers) is also expected to see further growth, driven by growing

demand for local consumer services to cater for an aging population (e.g. elderly care services,

laundry, and cleaning services) and a larger number of inbound tourists.

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4.3 Expectations for the future supply of labour

Similar to many advanced economies, Hong Kong faces the immense challenges of population aging,

which will pose a drag on the future supply of labour. Total labour force is projected to peak in 2018

and then to decline persistently until the early 2030s, before stabilising somewhat thereafter.

Indeed, the problem of an aging labour force has already begun to surface, with evidence of

manpower shortage in such sectors as construction, catering, human health services and elderly care

services.

In view of our present demographic situation, the Government has set out clearly the population

policy objectives. Measures include according priority to nurturing local youths, building the pool of

talent through continuing education and training, and enticing more elderly and female workers to

join the workforce. The implementation of the Statutory Minimum Wage since 2011 has aided to

this effect as seen from the higher labour force participation rate among female and older workers.

At the same time, the Government recognises the need to attract talents from outside, especially to

facilitate the development of emerging industries, with a view to broadening our economic base and

creating diversified job opportunities. In this regard, initiatives to attract global talent are also very

important as one of the ways to support Hong Kong's development into a high value-added and

diversified economy.

Conclusion

In sum, Hong Kong has undergone economic restructuring over the past 30 years to evolve into the

high value-added, knowledge-based service economy today. In tandem with this transformation,

our human capital has seen remarkable upgrading as well, with a rising proportion of better

educated and higher skilled workers.

Going forward, the Hong Kong economy, led by its Four Key Industries and emerging new industries,

should continue to move up the value chain and broaden our economic base. In order to support a

vibrant and competitive knowledge-based economy, we must upgrade the calibre of our human

capital and ensure that our workforce possesses the education and skill levels that fit the needs for

Hong Kong’s future economic development. Meanwhile, a more diversified economy would also

tend to create a wide array of job opportunities, thereby better safeguarding the livelihood of the

lesser skilled workers.

At the same time, we are also very mindful that the economy faces the immense challenge of

population aging, which is set to constrain labour supply down the road. The Government is actively

tackling this issue through formulating a population policy, which includes improving productivity by

education and training, and broadening the pool of workers by enticing the elderly and female

workers as well as attracting global talents, to support economic development.

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Relevant websites and other references

Hong Kong Economic Reports:

http://www.hkeconomy.gov.hk/en/reports/index.htm

Quarterly Report on General Household Survey:

http://www.censtatd.gov.hk/hkstat/sub/sp200.jsp?productCode=B1050001

Feature Articles on Labour Force Projections:

http://www.censtatd.gov.hk/hkstat/sub/sp200.jsp?productCode=FA100042

Other tables and publications on Labour Force:

http://www.censtatd.gov.hk/hkstat/sub/sp200.jsp

Quarterly Report of Employment and Vacancies Statistics:

http://www.censtatd.gov.hk/hkstat/sub/sp452.jsp?productCode=B1050003

Quarterly Report of Employment and Vacancies at Construction Sites:

http://www.censtatd.gov.hk/hkstat/sub/sp452.jsp?productCode=B1050004

Other tables and publications on Employment and Vacancies Statistics:

http://www.censtatd.gov.hk/hkstat/sub/sp452.jsp