Covid-19 Third-Wave Puts Hold on HK Job Market Recovery and Signs Unemployment Rate is Peaking

Links International’s July Hong Kong Job Market Index

Links’ Hong Kong Job Index (JOB:IN) provides data-based analysis of the Hong Kong job market based on a number of data sources including Hong Kong Labour Department statistics, HK job posting numbers and response rates in respect of a ‘basket’ of common commercial job types in Hong Kong.

Hong Kong Job Market Remains Relatively Flat for July

After a strong recovery in May and June, the job market in July remained relatively flat with no significant increase or decrease in the number of job postings. The brakes on the recovery were largely driven by Hong Kong’s third-wave of Covid-19 in July.

The number of job postings in the month of July remained at very similar to levels seen in June with only a 2% overall decrease, however, going into the final week of July, job postings began to drop at an increasing rate.

The job market decline was in part driven by the worsening Covid-19 situation in the city, with the latest decrease mirroring the decrease in job postings seen during previous waves of the virus. The severity of the latest Covid-19 situation has caused the government to place its strictest social distancing measures yet and civil servants to return to working from home arrangements. With over 10 days of continuous 100+ cases, we are likely to see a weaker job market in August.

The positive news is that although there has been a decline in the job market, the decreases have not been as steep as the decreases during the first 2 waves of Covid-19 in February and April, which we believe reflects businesses being more prepared and adapting to the “new normal”.

Interestingly job application rates to job postings decreased by 9% in July despite there being a drop in job postings (usually job application rates increase as job postings decrease). Given the 3-month unemployment rate has increased at a slower rate, the reduction in job application rates may potentially be a sign that the unemployment rate will level off in Q3 assuming the Covid-19 situation does not further deteriorate. 

Source: Links International Job Index

The number of job postings has shown a decrease in recent weeks but the decline is significantly less dramatic than the one seen in April

Source: Links International Job Index

Demand for IT Jobs Again Remains Resilient, Sales and Marketing Loses Momentum

The IT function showed its resilience again with the demand for IT professionals increasing 1% in the last week of the month despite all other functions dropping. No function has particularly been hit hard, but Admin & HR and Marketing / PR job postings saw 2 consecutive weeks of 3% dips.

• Demand for Brand Managers and eCommerce Managers saw a reduction  
• The need for Sales Managers and Key Account Managers also experienced a large dip
• Senior Finance roles showed a strong increase towards the end of July

Source: Links International Job Index

Unemployment Continues to Slow with Only a 0.3% Increase but Numbers Still Reach 15 Year High

A 0.3% increase has taken the unemployment rate to 6.2% for the April to June period, reaching a 15 year high. Total unemployment numbers increased by 10,300 bringing the total number of unemployed people to 240,700.

Although unemployment has continued to increase it has done at a significantly slower pace. The 0.3% increase in this period is much lower than the increase of 0.7% seen in March-May and the increase of 1% in February-April. This trend combined with the decrease in responses to job postings is an encouraging sign that the unemployment rate might be close to leveling off. 

HK’s GDP Shrinks 9% in Q2 Year-on-Year

Hong Kong’s GDP contracted 9% in the second quarter compared to the same period last year. With the city being hit by various challenges including the coronavirus pandemic, social unrest and geopolitical tensions, a hit to Hong Kong’s economy was to be expected.

However, GDP actually only decreased by 0.1% from the last quarter, showing that the overall economic situation appears to be steadying. In addition, China’s strong manufacturing activity expansion and 3.2% GDP growth in the second quarter, should come as positive news for the battered Hong Kong economy.

Covid-19 has caused many governments to revise their legislation to tackle the economic impacts of the virus. To learn about the latest quarterly updates check out our Q3 Onboard and APAC Legislation Comparison Chart, or if you are interested in knowing more about the latest government schemes contact us now for a chat.

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Links International is an industry leader in innovative HR outsourcing with services such as payroll outsourcing, visa application, PEO/EOR Secondment, outplacement, recruitment and more! Contact us for more information on how we can help leverage your HR function.