Matthew Cheung admits that unemployment of young people aged 15-24 is very serious because of their lack of experience. Hong Kong is not the only place that faces such problem but the youth projects help curb the problem from deteriotating.

The latest economic data suggest that the Hong Kong economy is beginning to show signs of stabilization, Secretary for Labour and Welfare Matthew Cheung said with great enthusiasm.

Although the jobless rate is under pressure to increase and will remain high for some time, he believed there will not be any drastic increase in both the speed and breadth of unemployment.

The government has done all it can to preserve jobs, he said, but the government has limited capability to create jobs, with the exception of infrastructure projects. The best the government can do is to enhance the business environment and stimulate investment.

Accordingly, the SAR government will continue to invest further in education and retraining in the hope of enhancing manpower training and Hong Kong's competitive edge.

Cheung made the above predictions during an exclusive interview with China Daily last week. On the same day, the Government Economist announced that GDP increased by 3.3 percent in the second quarter of 2009, reversing the downward trend of the past four consecutive quarters since the outbreak of the global financial crisis.

GDP growth in Q2

At the same time, the year-on-year decrease was significantly narrowed to 3.8 percent as compared with 7.8 percent in the first quarter of 2009.

During the interview, Cheung recalled that the jobless rate was 3.2 percent when the financial tsunami took the whole world by storm in September last year, as compared with 5.4 percent from April to June 2009.

Although this is a dramatic increase, it was, he said, far less damaging than the peak period of 8.5 percent that was recorded in June 2003, when the SARS virus was looming over Hong Kong.

"Hong Kong has this time shown a kind of resilience," he said. "Unemployment in Hong Kong is on the low side because we have good fundamentals and the government's relief measures are gradually paying off."

He noted that in the US, overall unemployment is much higher, at 9.5 percent, and in certain states, the jobless rate has reached the double-digit range.

The government's relief package to stabilize the financial system, prop up enterprises and preserve jobs is extremely important, said the labour minister.

If the financial system is unstable, the economy will dip very quickly. And if banks tighten their credit line, enterprises will have cash flow difficulties and will be unable to retain their employees.

"To date, the government's special loan guarantee schemes have benefited over 11,000 small and medium enterprises, which account for 98 percent of the local economy, effectively retaining some 220,000 jobs. They are very important in preventing large-scale closures of companies and deterioration of the unemployment situation," he said.

In recent months, the stock and property markets have been improving, thus stimulating growth in domestic consumption. Although the jobless rate is slowly increasing, he noted unemployment from March to May remained 5.3 percent, the same as February to April.

"All the available economic data suggest that the economy is beginning to stabilize," he said. "Unemployment has a respite, as some enterprises who had laid off surplus staff earlier on, including the HSBC, are starting to hire again."

Cheung reckoned it will still be some time before the economy can recover fully. "Save any unforeseen circumstances, there will not be any drastic U turns and the economy will be back to the right track. But there is no room for complacency and the government is prepared for the worst," he said.

Back to the right track

He predicted that unemployment would continue to surge for some time, the main reason being the influx of thousands of school leavers of various levels into the job market every summer.

He guessed unemployment is under pressure to increase, but the pace and magnitude of the increase will not be very serious.

The government is well-prepared and started planning contingency measures several months ago, he said. Among other things, the Internship Programme for University Graduates is an exceptional innovation in these exceptional circumstances, reflecting the government's innovative mindset.

In particular, graduates will benefit from the internship opportunities in major mainland cities that provide them the chance to gain familiarity with prevailing conditions and economic developmental trends in the country, while equipping themselves with valuable tools and experience during the economic downturn.

"It is not a PR show as some people claimed. It will indeed be a very expensive show if we spend HK$140 million to benefit only 4,000 interns," he asserted, suggesting that society and the economy, as well as the interns and their employers will benefit greatly.

"We were resolute and did not scrap the plan, even though it was criticized as 'cheap labour'. It turns out that average salary of the interns is close to HK$8,000 and the highest offer is HK$17,000."

Internship scheme useful

University graduates apart, Cheung said the government would also cater to the sub-degree holders, as well as form 3, 5 and 7 graduates. From this year, the Youth Pre-employment Training Programme (YPTP) and Youth Work Experience & Training Scheme (YWETS) that he initiated while he was Commissioner for Labour, have been improved and repositioned to provide more comprehensive training and employment service support to the young trainees.

Cheung, however, admitted that there remains a large group of people who do not benefit from the economic recovery, namely, the older people with low education and employment skills.

As Hong Kong is moving towards a knowledge-based economy, he noted, the number of professional jobs that entail specific skills has grown by 40 percent over the past decade.

"Yet the number of labour-intensive, low-end jobs has increased by a mere 2 percent, meaning it is getting more and more difficult for people in the 'one-high two-low' categories to find jobs nowadays," he observed.

In this connection, Cheung called on middle-aged people with little education and skills to pursue retraining to upgrade themselves. Take cleaning workers for example: workers cleaning external glass walls require a higher skill level than ordinary street cleaners, and so cleaners must enhance their skills to get jobs with higher pay.

Among all job categories, Cheung noted unemployment among construction workers and young people from the 15-19 and 19-24 age groups is the most severe.

He is highly optimistic that the sorry plight of the construction workers will improve, given that the Legislative Council has approved over HK$120 billion for public works projects of various sizes, while the top 10 infrastructure projects will commence one after another in a year's time.

Youth unemployment

As to youth unemployment, Cheung said Hong Kong is not the only place that encounters such problem.

A case in point is the 15 - 19 age group, among whom the jobless rate was 21 percent (or 9,500 people) from February to May this year.

Yet the situation is far more serious in other countries, he noted, topping 24 percent in the US, 23.5 percent in France and 38 percent in Spain.

In his opinion, young people who do not have high educational credentials and working experience will find it difficult to get jobs, but the various youth employment projects provide a way out for those youths who do not do well in school or have not gone far enough in their education.

"The youth employment projects in Hong Kong have been instrumental in curbing unemployment, or else the situation would be more serious than what we see now," said the labour minister.

Up to the end of June this year, over 90,000 young people have joined the YPTP project, and 70 percent of the trainees have found jobs, he noted.

As for the YWETS scheme, over 41,800 trainees were placed into training, while another 19,500 trainees secured jobs in the open employment market.

(HK Edition 08/21/2009 page4)