, Hong Kong

Why importing foreign labour to Hong Kong just won't work

Housing costs are too pricey.

According to Barclays, the government has started exploring long-term solutions to labor supply shortage, including the possibility of importing foreign labor and increasing female participation in the labor force. 

While importing foreign labor can in theory relieve labor shortages, it is not very practical in Hong Kong’s case.

Here’s more from Barclays:

High housing and rental costs make significant labor imports too costly. Firstly, it is unlikely that employers would be willing to provide housing subsidies to im¬ported labor. Without subsidies, however, foreign workers, especially those in low-skilled sectors, would have no incentive to work in Hong Kong.

Secondly, even if a significant inflow of workers were somehow made possible, it would ramp up housing demand and property prices that much further.

This means releasing local labor supply is the only viable solution to the labor shortage problem. One way to do this is by increasing female labor force par¬ticipation. This is complicated by the need for supporting infrastructure such as child care facilities.

Meanwhile, to slow down population aging, the govern¬ment needs to encourage childbirth, which again involves detailed long-term planning. These solutions are viable but visible results would not be seen for years.

For the time being, the widening gap between labor demand and sup¬ply will increase wage pressures. This is already happening in the construction sector, where the wages of steel fixers are even higher than white-collar pro¬fessionals.

Wages for menial jobs like dishwashing have also jumped in recent years. To minimize wage inflation and its impact on profits and growth, em¬ployers will have to find ways to raise productivity.

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