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Economy

Hong Kong's unemployment rate jumps to highest level in 15 years

Government to ease social-distancing measures to help bolster sagging economy

HONG KONG -- Hong Kong's jobless rate surged to 5.9% in the three months ending May 31, surpassing the 5.5% peak during the global financial crisis in 2009 and marking the highest level since 2005 in the aftermath of the SARS outbreak.

The unemployment rate for the March-to-May period compares with 5.2% for the previous three months, the government said on Tuesday.

The jump comes as the city's economy reels from the coronavirus pandemic and the prospect of impending national security laws, imposed by Beijing, which prompted Washington to remove trade and investment privileges for the former British colony, citing diminishing autonomy.

Hong Kong government officials expect the labor market to continue to "face pressure" in the near term.

"While the local epidemic situation has abated, it will take time for local economic activities to return to normal," Law Chi-kwong, the Secretary of Labor and Welfare, said in a statement. "The external environment also remains difficult as the pandemic continues to weigh on the global economy."

Unemployment in the consumption and tourism-related sectors soared to 10.6% during the period, with joblessness in the food and beverage industry hitting 14.8%, the government said.

Meanwhile, the underemployment rate jumped to 3.5%, the highest in nearly 17 years. The year-on-year declines in total employment and the labor force also widened to records.

Social-distancing measures will be relaxed further this week to shore up local consumption. Outdoor public gatherings of up to 50 people will be allowed, and restaurants can operate at full capacity starting on Friday.

Ahead of the release of the unemployment report, Chief Executive Carrie Lam said she believed the government's 81 billion Hong Kong dollar ($10.5 billion) employment support policy has had a positive impact. The wage-subsidy program covers 50% of workers' salaries for six months.

"We hope the economic recession, and our unemployment rate, will not be worse than in 2003 during the SARS period," Lam said.

Hong Kong's unemployment rate reached an all-time high of 8.5% in June 2003, when the city was in the throes of the SARS outbreak.

The hike in unemployment is the latest indicator of the financial hub's economic doldrums. The city posted the largest-ever quarterly economic contraction of 8.9% in the first quarter of 2020.

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