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Policy Address should tackle youth unemployment
The SAR government is to unveil its new Policy Address next week, with a focus likely on boosting the economy. But I think it is also of paramount importance to tackle the youth unemployment problem.
When Hong Kong was hit by the SARS epidemic 17 years ago, the overall unemployment rate climbed to 8.5 percent. By comparison, the unemployment rate of 6.2 percent recorded in the corresponding quarter this year, during the COVID-19 pandemic, is relatively moderate. However, under both health emergencies, the youth group (aged 15-24) is seriously affected. The unemployment rate for 15-19-year-olds reached 33 percent in 2003. Though the unemployment rate today for the same age group is not that shocking, the rate for the 15-19 and 20-24 groups are still two and three times higher than the overall rate, reaching 18.8 percent and 14.3 percent respectively, the highest among all age groups.
Several foreign studies concluded that youth unemployment had brought heavy costs to young people and society as a whole.
A study of financial crises in Europe during 1980-2005 confirmed a far-reaching impact on youth unemployment rates of up to five years after the onset of the crisis, with the second and third years being the worst. Even college graduates were affected; they had a lower income in the following 10 years. And those who did not receive a university education were worse off. Japan is an example. The economic recession that began in the mid-1990s has caused many employers to change the form of employment from long-term to temporary or part-time jobs. Studies in the United States, Canada, and South Korea have also found that younger workers were laid off first versus older people; it also took them longer to secure a stable job.
Unemployment can easily lead to depression. In the last century, Professor Harvey Brenner of Johns Hopkins University pointed out that for every percentage point increase in the unemployment rate, the suicide rate would rise by as much as 4 percent. In 2003, with a high unemployment rate in Hong Kong, 18.8 out of every 100,000 people committed suicide, the highest rate recorded in the last 20 years. Under the pandemic today, no change in the suicide rate was detected for the time being, but it should not be taken lightly.
Over the years, the SAR government has provided various employment support to young people, including the Youth Pre-employment Training Programme and the Youth Work Experience and Training Scheme in 1999 and 2002 respectively. In September, the SAR government further optimized the programs, such as increasing allowances to employers and young employees. However, with youth unemployment continuing to rise, we must work from more aspects to solve the problem. This should also be the focus of this year's Policy Address, including the following measures:
First, provide five-year interest-free loans to local startups to save them and the newly formed ecosystem. Young people are the fresh impetus of startups, which also provide youth with job opportunities. In the past few years, thanks to the efforts of the government, Hong Kong's startup ecosystem has taken shape. In the five years since the establishment of the Innovation and Technology Bureau, the government has invested more than HK$100 billion ($12.9 billion) in innovation and technology. The results are rewarding: According to InvestHK, there were more than 3,000 startups in Hong Kong in 2019, an increase of 21 percent year-on-year. More than 12,000 employees were hired, an increase of nearly 30 percent from 2018.
However, the government's previous efforts could be wasted as a result of the pandemic. A February survey conducted by startup organization Youth Entrepreneur Warrior and the Asia Pacific Entrepreneur Association found that almost all startups were not optimistic about the business environment. Nearly 40 percent of them had started laying off employees and 20 percent were planning to withdraw.
Therefore, if the government does not take a bold move to help them, the startups could lose momentum and people eventually.
Second, export software, hardware, and consulting services for “smart cities” to the 10-member Association of Southeast Asian Nations for the development of local professionals and the economy.
The business opportunity in the smart-city sector is huge. Market research companies CB Insights and Frost & Sullivan have predicted that by 2025, the global value of the industry will range from $1.4 trillion to $1.56 trillion.
As Hong Kong's second-largest trading partner, ASEAN is eager to develop smart cities, as the infrastructures in the groupings have not kept up with the booming economic development.
On the other hand, Hong Kong's performance in the smart-city sector has been widely recognized internationally. According to the IESE Cities in Motion Index 2020, published by the IESE Business School in Spain in July, Hong Kong's smart-city performance continues to excel. It was ranked 10th among 174 cities in the world and third in the Asia-Pacific region.
Based on the transaction volume of data centers in the Asia-Pacific region from early 2020 to the end of August, Hong Kong is seen as the fourth-most-attractive data center location in the region, according to a research by consulting firm Cushman & Wakefield. These rankings prove Hong Kong has significant advantages in exporting smart-city services. The SAR government must seize the business opportunities and create job opportunities for local professionals, especially young people.
Third, prepare the next generation for future challenges and add coding to the regular curriculum of school education.
Many countries have added coding to the mandatory curriculum of primary and secondary education, including the United Kingdom, Estonia, Italy, Finland, France, Spain and South Korea. Hong Kong should catch up as soon as possible by speeding up training in this area to inject momentum into Hong Kong's talent-pool growth.
Fourth, use information technology, such as the interactive map dashboard, to enhance administration transparency and unite people
In this year's smart-city ranking from IESE Business School, Hong Kong scored very low in “social cohesion”, at 111th.
The government made use of the interactive map dashboard, providing a clear and updated picture of the COVID-19 outbreak, to swiftly rebut rumors and clear up confusing messages about the pandemic. Now the dashboard can also be used to demonstrate the effectiveness of various relief programs, such as showing the number of companies and employees benefiting from the Employment Support Scheme and the number of temporary jobs created. By doing so, people have a clearer picture of the government's administration, enabling the public to monitor the government's performance. This will help unite people to revive Hong Kong.
The Asian Development Bank mentioned, in its report Tackling the COVID-19 Youth Employment Crisis in Asia and the Pacific, released in August, an effective policy response should underpin “three cross-cutting considerations”, which are: “reaching the most vulnerable youth including the poorest and marginalized young women; meaningfully engaging young people in policy development and social dialogue; and facilitating disaggregation of crisis impact data by age and enhanced youth labor market information”. This echoes the belief that smart cities should be built from the bottom, and that to build a livable city requires the joint effort of all people. It should also be a priority of the SAR government.
Dr. Winnie Tang
Adjunct Professor, Department of Geography, Faculty of Social Sciences; and Faculty of Architecture, The University of Hong Kong