Jobless Rate 'could Soar Past 8 Percent'

A human resources academic at Baptist University has warned that the mass layoffs at Cathay Pacific were just the top of the iceberg and the city's unemployment rate would surge past 8 percent by the end of the year.

Cathay announced last week that 8,500 jobs – including 5,300 Hong Kong-based positions – would be cut as part of the fallout from the coronavirus outbreak. Dr Felix Yip, associate director of the university's Centre for Human Resources Strategy and Development, said on Wednesday he expects more companies will follow suit and make staff redundant.

A survey conducted by the university between July and September showed that 30 percent of firms had already cut staff, weeks before Hong Kong's flagship carrier announced its job-axing plan. Some of the responses were collected from firms before the third wave of the outbreak hit the city.

"You have a large surplus of manpower. So what can you do? And then it makes Cathay Pacific less competitive. Being a reasonable employer, I guess the other companies will do the same thing," Yip said.

"That's why (I made) the prediction for the rise of the unemployment rate further."

Yip warned the jobless rate could hit 8 percent by year's end. "Judging from the current moment, I believe Cathay Pacific is the first one. Other companies are doing similar things, privately and silently."

Hong Kong's unemployment rate in the three months ending September stood at 6.4 percent, the highest in about 16 years.

The academic is also predicting that local workers will not get a salary increase or even see a pay cut next year.

Amid the grim outlook, Yip encouraged Hong Kong employees to look north for opportunities, especially the Greater Bay Area.

"They have to (expand) their opportunities," he said. "Greater China is one of the good options because the language, the lifestyle are quite close. Those cities in Guangdong province are so close to us."

Yip said he doesn't believe the city's economy would recover if Europe and the United States continue to be hit by Covid-19 because of its reliance on exports and tourism.

"Hong Kong is an export city so we have a very close contact with other countries particularly the US and Europe. If they cannot improve themselves, I doubt if the economy of Hong Kong can improve."