Hong Kong’s Imported Mainland Labor Now Competing With Local Labor: Analysis

People walk past Hang Seng Bank in Central Hong Kong on Jan. 19, 2024. Bill Cox/The Epoch Times

News Analysis

Hong Kong is starting to feel the impact of the immigration wave, with a talent drain occurring across various industries. While Hong Kong authorities have been importing foreign laborers from mainland China, the effect appears contrary to the plan.

Based on data compiled by The Epoch Times, the Hong Kong authorities imported over 18,000 laborers in 2023, a 4.3-fold increase compared to 2019, when only 3,378 were imported. The workers comprise various industries and skill levels.

However, Hong Kong’s pillar industries continue to decline, with continuous layoffs in the financial sector and an overall economic contraction. As a result, while the influx of foreign labor puts pressure on local employment and wages, it may not necessarily contribute to local consumption, residency, and property purchases, forming a pure competition with the local labor force.

From 2019 to 2021, the annual number of imported foreign laborers was only slightly over 3000. However, the number began to increase in 2022, primarily due to a significant increase in imported staff for community services.

All foreign labor importation schemes were expanded after the Enhanced Supplementary Labour Scheme was implemented in 2023. Based on The Epoch Times’ statistics (Table 1), the number of imports surged from 5,829 in 2022 to 18,628 in 2023.

The number of foreign laborers in the construction industry surged to 7,917, and the Enhanced Supplementary Labour Scheme introduced in September 2023 included 26 more work types. Foreign workers were also directly imported into nursing homes, aviation, and minibus industries.

75 percent of Ironworkers Don’t Have Enough Work

Despite official claims of labor shortages, in the first quarter of 2024, Hong Kong’s unemployment rate rose by 0.1 percentage points to 3 percent, and the number of underemployed persons increased by 2,400 to 40,000.

In the construction industry, which imported nearly 8,000 foreign laborers last year, the Hong Kong Construction Industry Employees General Union’s April survey showed that 75 percent of surveyed ironworkers reported no work or insufficient work, with nearly a third working only 1 to 3 days a week.

According to inmediahk.net, workers feel foreign laborers are taking their job opportunities. A survey done by Photo Media last year comparing four types of work found that the salaries of foreign workers were generally about 10 to 20 percent less than the market price.

The immigration wave has also led to a change in employment structure. Figures show that in the three major industries of finance, trade, and tourism, employment decreased by 2.85 percent to 87.28 percent compared to 2019. Talent flowed more towards doctors, lawyers, and accountants, with an increase of 5.41 percent to 11.73 percent compared to 2019.

The largest increase was in registered nurses, with an increase of 17.32 percent. At the end of 2023, the Department of Health submitted a draft amendment to the Nurses Registration (Amendment) Bill 2023 to the Legislative Council, proposing to introduce non-locally trained nurses without examination.

Similarly, the employment numbers of civil servants and teachers, previously considered “iron rice bowl (secure jobs),” decreased by 0.72 percent and 2.85 percent, respectively. The change in civil servants’ numbers was possibly due to the concern that becoming civil servants may affect travel and immigration, while the change in teachers’ numbers was directly related to the immigration wave-caused decline in the student population.

The Education Bureau’s response to legislators in January showed that they lost 6,748 teachers in the 2022/23 school year, with the largest increase in losses among kindergarten teachers, with 1,810 lost.

However, figures from the University Grants Committee show that in the 2022/23 academic year, only 473 mainland Chinese students studied education in Hong Kong’s universities, accounting for only 5.88 percent. This indicates that mainland Chinese students are not quite interested in becoming teachers in Hong Kong and cannot fill the industry’s vacancies.

Moreover, amid the immigration wave, a number of parents plan to take their children overseas for education. In the future, primary and secondary schools could follow the closure trend of kindergartens, contributing to mainland students’ lack of interest in entering the teaching industry.

In the past, the main way to work in Hong Kong was to attend local universities, obtain qualifications in industries such as finance, accounting, and law, and then enter the local job market.

According to a report by the Hong Kong Census and Statistics Department, in the 2019/20 academic year, 12,900 mainland students, including associate degree, bachelor’s, and postgraduate students, accounted for 12.72 percent of the total university students.

By the 2022/23 academic year, the number of mainland students had increased to 16,200, a sharp increase of proportion to 15.83 percent. Based on the data, mainland students who graduated from Hong Kong’s local universities can be expected to supply industries such as finance and accounting.

As of the end of February, the Hong Kong authorities’ Top Talent Pass Scheme (TTPS) had approved nearly 59,000 applications, of which 43,900 had come to Hong Kong. The authorities announced that the median monthly income for Top Talents was about HK$50,000 ($6,380), “significantly higher than the median monthly income in Hong Kong (HK$20,000 ($2,550)),” with 20 percent of them working in the financial services industry.

Last week, Morgan Stanley and HSBC cut dozens of jobs in the Asia and Pacific region, with at least 80 percent from mainland China and Hong Kong. Deutsche Bank had also cut ten positions in its Asian private banking division, bringing the total cuts in Hong Kong and Singapore to as many as 60 positions in the past year. Talents introduced by TTPS and other channels are competing for fewer and fewer high-paying finance positions in Hong Kong.

In the four major industries, the finance industry’s stock market capitalization has dropped to tenth globally, and the shipping industry’s port throughput has dropped out of the world’s top ten.

Affected by the decline in property prices, developers have become less active in bidding for land. Four aborted government residential land tenders from 2022 to 2023, higher than in the previous seven years, indicate a reduction in future development projects.

A pedestrian walks past a branch of a HSBC bank in central London on April 26, 2022. Niklas Halle'n/AFP via Getty Images

According to regulations on importing foreign labor, if the imported workers are residents of mainland China, employers can allow them to live in the mainland or their own city. This partially explains why Hong Kong’s retail and catering sectors have not seen improvement, as many of the filled positions are not held by Hong Kong residents: after work, they return to their homes in mainland China.

Hong Kong’s labor force from the lower to upper levels is undergoing changes: Lower-paying grassroots jobs are being taken by workers with lower wages, while middle-to-upper-level positions are shrinking with fierce competition.

Grassroots workers and high-quality talents coming to Hong Kong do not necessarily reside in the city, making them unable to fill the housing vacated by the immigration wave or stimulate the local retail and catering industry. As a result, mainland workers in Hong Kong only end up competing for positions and salaries with local residents.