Hong Kong Faces Economic Challenges: Income Drops and Unemployment Rises
Hong Kong’s economy has faced a tough time in the second quarter of this year. According to a report by the Census and Statistics Department, the median monthly income for residents fell by HK$300 (US$38), from HK$21,400 in the first quarter to HK$21,100 in the second quarter. For about 2.8 million households, the median monthly income dropped by HK$700, from HK$30,000 to HK$29,300.
A study by UK-based consultancy WTW showed that nearly 40 percent of Hong Kong companies have cut their payroll budgets for the financial year ending in March, up from 21 percent the previous year. This shows that businesses are being very careful with their money.
Additionally, a survey by the Hong Kong Small and Medium Enterprises Association and Junior Chamber International Hong Kong found that 70 percent of small and medium enterprises (SMEs) reported business levels below pre-pandemic norms. This means that many small businesses are still struggling to get back to normal after the COVID-19 pandemic.
The official statistics also showed that while the labor force grew by 8,900 to 3,474,400, unemployment increased to 114,700 in the second quarter, up by 3,000 from the previous quarter. The construction, retail, accommodation, and food services sectors were hit the hardest, with unemployment rates in these sectors much higher than the overall average rate of 3 percent. The number of underemployed residents also increased by 4,500, reaching 44,500 during the same period.
Many shops, restaurants, and cinemas have closed, adding to the economic problems. In response, the Hong Kong Monetary Authority has set up a task force to help small and medium-sized enterprises (SMEs) with loan repayments. Chief Executive John Lee Ka-Chiu acknowledged the economic difficulties but remained hopeful, saying that the economy could improve next year as old businesses are replaced by new ones.
The economic challenges in Hong Kong are due to a mix of local and global factors, including the ongoing effects of the pandemic and broader economic uncertainties.
Doubts Revealed
Hong Kong -: Hong Kong is a special administrative region of China. It is a busy city known for its skyscrapers and a major financial hub.
Economic Challenges -: Economic challenges refer to problems that affect the economy, like people losing jobs or earning less money.
Income Drops -: Income drops mean that people are earning less money than they used to.
Unemployment -: Unemployment means that people who want to work cannot find jobs.
Census and Statistics Department -: The Census and Statistics Department is a government office that collects and shares information about the population and economy.
WTW -: WTW stands for Willis Towers Watson, a company that provides advice and solutions to businesses, including how to manage their money and employees.
Payroll Budgets -: Payroll budgets are the amount of money companies plan to spend on paying their employees.
Small and Medium Enterprises -: Small and medium enterprises (SMEs) are businesses that are not very large. They usually have fewer employees and less money than big companies.
Construction, Retail, Accommodation, and Food Services Sectors -: These sectors are different types of businesses. Construction involves building things, retail is about selling products, accommodation includes hotels, and food services are places like restaurants.
Chief Executive John Lee Ka-Chiu -: John Lee Ka-Chiu is the leader of Hong Kong’s government. He is responsible for making important decisions for the city.
