Around the world, eyes are turning to the near future, and what it will have in store for employers and employees alike, with many looking at Hong Kong’s jobs market. After a turbulent couple of years, several key indicators point to a vastly improved outlook.
Despite health concerns, price pressures and supply disruptions, the global recovery taking place during the pandemic is likely to continue, given vaccination program expansion and the introduction of therapeutics, according to a recent report by the IMF, which expects the global economy to grow 5.9% in 2021 and 4.9% in 2022. Within this global picture lies a great deal of divergence. Read on to find out how Hong Kong’s jobs market and economy, in general, are likely to fare.
Hong Kong Economic Resilience
While many economies were crippled by the pandemic, Hong Kong experienced 18 months of recession, the SAR’s longest on record. However, having escaped the worst effects of the pandemic and because of prudent and supportive policies, economic activity has rebounded, and that bodes well for Hong Kong’s jobs market. Sentiment has turned a corner and employers are dusting off and implementing expansion plans.
The city remains one of the world’s freest markets, it’s a major financial centre and logistics hub, and it boasts a highly developed and sophisticated services sector. Its economy is closing out the year with stellar growth figures. Hong Kong’s economy grew 5.4% in real terms in the third quarter of 2021 year-on-year (YoY), after expanding 7.6% YoY in the second quarter. The government expects annual GDP growth of 6.4% for the year, though that’s coming off a low base.
Hong Kong’s Jobs Market
As growth rose, the unemployment rate dropped, to 4.3% in the three months to October 2021. However, several sectors are experiencing tight labour supply, reports The Standard. This growth and labour supply tightening will result in the demand for talent growing significantly leading up to 2022 across most of the economy.
Whereas some markets are experiencing higher inflation, which directly impacts salaries, in Hong Kong the government forecasts price inflation of 0.7% for 2021. Salary growth is expected to outpace inflation.
Workers in Hong Kong can expect their salary to increase 3.2% on average in 2022 YoY, a recent report forecast, which would be an improvement on 2021’s average salary increase. Factoring in benign inflation, that’s a real-world increase. The report predicts annual wage growth in Asia will be highest in China, where salaries are expected to increase 5.6% YoY.
Sectors in Hong Kong where wage growth is likely to be concentrated are banking, logistics, transport, information technology and healthcare.
A key trend affecting the jobs market is Hong Kong’s demographic shift. The SAR’s population is ageing and the birth rate is low. For instance, the employee cohort aged 55 or over is forecast to increase at 4.3% per year from 2012 to 2022. The expansion of this age group will be accompanied by a decline in the ratio of younger workers. Hong Kong is not alone as other countries in the region are experiencing the same trend.
The main effect of this trend is to create a shortage of qualified workforce, which will make it increasingly difficult to fill roles. Therefore, companies need to create and implement a recruitment plan that takes this trend into account.
Companies that are unable to navigate these changing demographics could encounter higher salary costs, and reduced competitiveness because of declining productivity. In terms of company benefits, the ageing of the working population will increase health care costs, so accurate projections must be obtained. However, as an open international market, Hong Kong is well-placed to compete internationally for talent.
Given the backdrop outlined above, we expect to see the following trends in 2022.
- Implementation of flexible working
Now most companies have got the hang of hybrid working models to get existing work done, many will look at making use of flexible staff as part of their business expansion efforts. This is an especially attractive strategy for companies that lack the resources to take on permanent staff. Further, as employees are now familiar with the benefits of working from home and greater flexibility, candidates will increasingly seek this arrangement when searching for roles.
- Supply uptick
As the economy has returned to growth and is expanding rapidly and the pandemic prevention measures are proving to be effective, more employees will likely look to switch jobs. During times of uncertainty, workers tend to become risk-averse. Therefore, as the outlook improves even further, we can expect more people to look at moving up the career ladder by switching jobs.
- Quicker turnaround
Companies have implemented effective measures and processes to enable the hiring process to be conducted remotely, and therefore we can expect timelines to return to pre-pandemic levels, if not accelerate. The increasingly rapid implementation of technology has seen online interviews become more widespread. Not only that, the entire hiring process, from candidate selection and presentation of benefits to managing counter offers and decision-making, has been streamlined, which benefits both employers and job candidates.
- IT demand to accelerate
The switch to working from home wouldn’t have been possible were it not for IT. With flexible work patterns here to stay, demand for IT employees will remain high, supported by companies’ drive to digitalise and embrace cloud-based operations.
Given a brighter economic outlook and the ubiquitous implementation of technology, as well as the adoption of hybrid work models, Hong Kong’s jobs market landscape is undergoing several fundamental changes that are here to stay. Though talent supply is expected to be tight in several sectors, employers can look forward to more candidates looking to change jobs, and a quicker turnaround for finding staff, whereas candidates can expect greater convenience during the interview, acceptance and onboarding process, as well as real-world wage increases.
Talking with specialist recruiters in the industry can be very beneficial to both candidates and employers in 2022. Juan Dorfling and his team in Hong Kong are always happy to help with professional advice throughout the whole recruitment process. Get in touch with our team and we will take it from there!