The impact of the immigration wave in Hong Kong is gradually becoming apparent, with talent drain affecting multiple industries, even leading to a vacancy rate of up to 10% in the “iron rice bowl” of civil servants. The Hong Kong government has been importing a large number of foreign labor mainly from mainland China since last year.
According to our statistics, the Hong Kong government introduced more than 18,000 workers last year, a significant increase from the 3,378 in 2019, with a surge of 4.3 times. Various skilled and grassroots workers have been brought in on a large scale. However, Hong Kong’s pillar industries continue to decline in rankings, with news of layoffs in financial institutions persisting, indicating an overall economic contraction. Therefore, the influx of a large number of foreign workers not only puts pressure on local employment and wages but may not necessarily stay in Hong Kong for consumption, residence, or property purchases, leading to pure competition with the local labor force.
Data shows that from 2019 to 2021, the annual number of imported foreign workers was only slightly over three thousand. This number started to increase from 2022, mainly due to a significant increase in the input of staff in community services facilities. However, after the implementation of the “Supplementary Labor Optimization Program” in 2023, all foreign labor import programs expanded. According to our statistics (refer to Table 1), the number of imports surged from 5,829 in 2022 to 18,628 in 2023. The construction industry saw a significant increase in foreign labor to 7,917 people, and the Supplementary Labor Optimization Program launched in September 2023 increased to 26 positions, in addition to direct imports in nursing homes, aviation, and minibus industries.
Although officials have continuously pointed out labor shortages, the unemployment rate in Hong Kong for the first quarter of this year increased by 0.1 percentage point to 3%, with the number of underemployed individuals rising by 2,400 to 40,000. The construction industry, which imported nearly 8,000 foreign workers last year, saw the Hong Kong Construction Industry General Union’s survey in April revealing that seventy-five percent of surveyed ironworkers reported no or insufficient work, with nearly thirty percent working only 1 to 3 days a week. Independent media reports in Hong Kong suggest that workers feel that employment opportunities are being taken away by foreign labor. Hong Kong online media, “Light Media,” conducted a comparison of four job types last year and found that the salaries for hiring foreign workers were generally about 10% to 20% cheaper than market rates.
The immigration wave has also led to changes in employment structure. Figures show that employment in the three major industries – finance, trade, and tourism – has decreased by 2.85% to 87.28% since 2019 (refer to Table 2), with talent increasingly flowing into the “three professions”: doctors, lawyers, and accountants, the three licensed professions, witnessing an increase of 5.41% to 11.73% since 2019. The largest increase was in the number of registered nurses, which increased by 17.32%. At the end of last year, the Department of Health submitted the “2023 Nurses Registration (Amendment) Bill” to the Legislative Council, proposing to introduce non-locally trained nurses without examination, with the main increase in the number coming from local recruits before 2023.
Similarly, for civil servants and teachers, which are considered stable jobs in the government, employment has also decreased by 0.72% and 2.85% respectively. The former may be influenced by government service or future travel and immigration, while the latter is directly impacted by the declining student population due to the immigration wave. The Education Bureau’s document in January this year, in response to Legislative Council members, indicated a total loss of 6,748 teachers in the 22/23 academic year, with the largest increase in the loss of kindergarten teachers, reaching 1,810. However, according to the University Grants Committee data, the number of mainland Chinese students in educational universities in 2022/23 was only 473, accounting for a mere 5.88%, reflecting a lack of interest from mainland students in becoming teachers in Hong Kong and unable to fill the gaps in Hong Kong’s education sector losses, coupled with most parents taking their children overseas for further studies, primary and secondary schools will face a situation similar to the kindergarten graduation wave, where there might not be many mainland students willing to enter the field.
In the past, the main way to come to Hong Kong for work was through attending local universities, obtaining certain industry qualifications in fields such as finance, accounting, and law, and then entering the job market in Hong Kong. According to a report by the Hong Kong Census and Statistics Department, the number of mainland students, including associate degree, bachelor’s, and postgraduate students, was 12,900 in the 2019/20 academic year, accounting for 12.72% of the total university population. By the 2022/23 academic year, the number increased to 16,200 mainland students, representing a sharp increase to 15.83%. Based on this proportion, industries such as finance and accounting have a supply of mainland students from local universities.
By the end of February, nearly 59,000 applications had been approved under the Talent Admission Scheme, with 43,900 people already in Hong Kong. The government announced that the median monthly income for high-level talents is approximately HKD 50,000, “significantly higher than the local median monthly income of HKD 20,000,” with twenty percent engaged in the financial services industry. Bloomberg reported that investment bank Morgan Stanley in Asia downsized by 50 people, with at least 80% coming from China and Hong Kong. Another report by the same media outlet indicated that last week, Deutsche Bank cut an additional 10 positions in its Asian private banking sector, with a total of up to 60 positions cut in Hong Kong and Singapore over the past year. The high-level talents introduced through channels like the Hong Kong government’s Talent Admission Scheme are competing for increasingly scarce high-paying positions in the finance sector.
Among the four major industries, finance and shipping have seen a decline, with the former dropping to tenth place globally in terms of stock market capitalization, and the latter falling out of the top ten in terms of port container throughput, suggesting that Hong Kong’s economic scale may not be as strong as before. With property prices falling, developers have become less proactive in land acquisitions, evident in the increase in the number of government residential land lots being left unsold from 2022 to 2023, reaching four lots compared to a total of three unsold lots in the previous seven years, indicating a decrease in future development projects.
Developers are taking advantage of this situation to reduce inventory, with Sun Hung Kai Properties (1113) and MTR Corporation (066) jointly launching the Blue Coast project in Wong Chuk Hang, where the first batch of 138 units were priced at an average of HKD 21,968 per square foot after discounts, a discount of 21.5% compared to neighboring new developments; and Henderson Land Development (041) and MTR jointly launched the first batch of 115 units in the La Sinfonía project above Ho Man Tin Station in April, with an average discounted price of HKD 19,988 per square foot, representing a 20% discount compared to similar properties in the area, bringing prices back to levels seen eight years ago.
According to regulations on imported foreign labor, if the hired worker is a mainland resident, the employer can arrange for the worker to be accommodated in mainland China or their place of residence. This arrangement partly explains why the retail and dining sectors in Hong Kong have not seen a significant improvement, as many of the fill-in workers do not reside in Hong Kong but rather return to their homes in mainland China after work, not to mention the stimulation of night markets depending on them.
The labor force in Hong Kong is slowly undergoing changes from the top to the bottom, with entry-level jobs being replaced with lower wages and a contraction of mid to high-level positions. For entry-level workers and high-level talents coming to Hong Kong, Hong Kong is no longer their essential place of residence, failing to meet the housing needs brought on by the immigration wave and having minimal impact on stimulating the retail and dining sectors. It remains questionable whether they will transition into property buyers in the future, as mainland laborers working in Hong Kong only end up competing with local residents for positions and salaries.