Hong Kong's Economic Woes Deepen: Earnings and Employment Under Strain

Hong Kong's economy faces significant challenges, with resident earnings and employment declining in the second quarter. Median incomes have dropped, businesses are cutting payrolls, and unemployment is up. The Hong Kong Monetary Authority has initiated support measures for SMEs, while the Chief Executive remains hopeful for future recovery.

Hong Kong's economy has suffered a notable decline in the second quarter, as residents' earnings and employment statistics reflect increased financial stress, reports the South China Morning Post (SCMP). According to the latest "Quarterly Report on General Household Survey" from the Census and Statistics Department, the median monthly income fell by HK$300 (US$38), decreasing from HK$21,400 in the first quarter to HK$21,100 in the second quarter. This significant income reduction comes amid ongoing economic adversities.

For around 2.8 million households, the median monthly income dropped by HK$700, from HK$30,000 to HK$29,300. This data excludes foreign domestic helpers and highlights a broader trend of financial pressure on local residents. A study by UK-based consultancy WTW found nearly 40 percent of Hong Kong companies have cut their payroll budgets for the financial year ending in March, up from 21 percent a year earlier, indicating widespread financial caution among businesses in the region.

A survey conducted in May by the Hong Kong Small and Medium Enterprises Association and Junior Chamber International Hong Kong revealed that 70 percent of small and medium enterprises (SMEs) reported business levels below pre-pandemic norms, underscoring ongoing struggles in the SME sector to fully recover from the COVID-19 pandemic's economic impacts.

Official statistics showed the labour force grew by 8,900 to 3,474,400, but unemployment rose to 114,700 in the second quarter, an increase of 3,000 from the previous quarter. The construction, retail, accommodation, and food services sectors were notably affected, with unemployment rates in these sectors significantly exceeding the overall average rate of 3 percent. Additionally, the number of underemployed residents increased by 4,500, reaching 44,500 during the same period, reflecting broader economic instability, as reported by SCMP.

The city has experienced a wave of closures in shops, restaurants, and cinemas, exacerbating the economic downturn. In response, the Hong Kong Monetary Authority has established a task force to assist SMEs struggling with loan repayments. Chief Executive John Lee Ka-Chiu acknowledged the economic difficulties but expressed optimism, noting that the transition of old businesses being replaced by new ones is a normal economic process, and predicted potential economic improvements in the coming year.

Hong Kong's economic challenges reveal a complex mix of local and global factors, including the pandemic's lingering effects and broader economic uncertainties. (ANI)

(With inputs from agencies.)