Imported Labour Policies in Hong Kong: Understanding Local Trepidation

The Hong Kong government made a landmark announcement on 13th June 2023 with new policies to import around 20,000 workers in the construction, transport and aviation sectors. The policies also included a lift of an employment ban on non-local workers in 26 categories, including waiters, hairstylists and salespeople. While employers in Hong Kong are clamouring for migrant workers, labour groups have criticised the plan for bypassing the scrutiny of union leaders and ignoring the concerns of local workers. Often compared with Hong Kong, Singapore has long-standing policies to introduce low-skilled imported labour but upon examination, the political background and effects of imported labour on locals are markedly different from Hong Kong. This article examines the main reasons for local trepidation towards imported labour in Hong Kong from political, economic and social perspectives, using Singapore as a comparison to explain some of the reasons for the differences in local reactions to the imported labour policies.  

 

I.      “Announce First, Consult Later”—Muffled Voices of Opposition

Both the pro-Beijing  Hong Kong Federation of Trade Unions (HKFTU) and pro-democracy Democratic Party have accused the government authorities of deliberately evading the scrutiny of the Labour Advisory Board (LAB). The LAB is a non-statutory body composed of major employer associations and employee representatives appointed by the Chief Executive and is tasked with monitoring the Supplementary Labour Scheme and vetting applications for importation of labour. Under the existing mechanism, the Board would give priority to local employment and only grant entry to foreign workers to take up jobs that could not be filled locally.  

 

An LAB employee representative, Mr Lam Wai Hong, revealed that the government directly announced its labour importation policies without meeting and consulting with the Board in advance. Infuriated at the government’s unilateral action to bypass consultation and disregard the interests of local employees, all six employee representatives stormed out of the meeting room in protest in a recent board meeting with the government, which happened a week after the government’s announcement of its mega labour importation schemes.

 

The Democratic Party, Hong Kong Construction Industry Employees General Union (HKCIEGU) and the LAB’s employee representatives also questioned whether the government’s decision-making was evidence-based. For instance, the government lacked statistics of an actual labour shortfall in each of the 26 low-skilled categories that it announced to lift the imported ban. 

 

Labour Minister Chris Sun reassured that the advisory board will still play an important role in gatekeeping and will be regularly informed of the latest development. He also said the government will continue to prioritise and protect local interests. However, all these assurances could be easily reduced into lip service without the backing of sound actions. The government’s decision to bypass the labour watchdog from inception amounts to circumventing the vetting and monitoring power of LAB, diminishing it into a mere talk shop that has the right to be informed. With the existing oversight mechanism curtailed, it is hard to instil confidence among the local populace that their interests are well-protected and will be given priority in case of a loss of balance between local employees and the employers-migrant labour grouping. 

 

II.     Political Accountability—A Government Not Accountable to Its Local People 

The governance of Hong Kong has always been executive-dominant. As explained by Professor John Burns, the executive authorities are only weakly accountable (essentially answerable but not subject to sanctions) to the legislature. The imposition of the National Security Law in 2020 and the electoral changes in 2021, which resulted in ‘patriots-only’ legislative and district councils, have further reduced the representative elements of the territory’s political structure and curtailed the space for civic expression. This presents a significant difference from Singapore, a city-state whose government and parliament are largely compelled to hold accountable to its electorate. 

 

Under the current political arrangement and climate, it is difficult for the people in Hong Kong to voice their opinions on labour importation policies via both institutional and non-institutional political participation means. Protest activities are closely invigilated by police, leaving little room for dissident voices, even those from the pro-establishment. HKFTU, for example, had scrapped plans for its Labour Day march to advocate workers’ rights after failing to obtain the police’s letter of no objection. The local populace also faces increasing pressure from Beijing not to demonstrate on the streets. Two days before HKFTU halted its plan, China’s top official for Hong Kong affairs Xia Baolong lectured the public that protests were not the “only ways” for the public to air their views, and livelihood issues could easily be “hijacked” by those with “ulterior motives”. 

 

There is also little political consequence to Hong Kong’s senior officials for policy blunders such as heavily slanted policy in favour of the corporates and migrant labours. Citing an example from Singapore to illustrate this argument, Prime Minister Lee Hsien Loong had drastically tightened his curbs on foreign workers and immigrants after facing backlash over migration policies that led to record-high opposition gains in the 2011 elections. The ruling People’s Action Party continued to be attentive to the public pulse after the 2011 awakening call. In 2021, it again recalibrated its foreign labour policies to address the mounting anxieties among locals over job competition by further raising the visa criteria for expatriates, increasing local lower-income workers’ wages and overseeing companies’ hiring process through closer scrutiny. It would be hard to conceive that Hong Kong citizens could exert a similar degree of influence on its government, and that the government would demonstrate comparable agility in adjusting its labour and migration policy postures to advance local economic and social interests. 

 

III.    “Involution” from the North—Scramble for Jobs and Over-competition 

Mainland China’s youth unemployment has reached a historical high. According to a Chinese government census published in May 2023, more than one in five of China’s urban youth aged between 16 and 24 are unemployed. Stories of graduates of prestigious Chinese universities (commonly branched as ‘985 Project’, ‘211 Project’, ‘Double First Class’) unable to find jobs constantly made the headlines on the Chinese presses and went viral on social media platforms such as Bilibili and Little Red Book. In fact, the competition among mainland Chinese youth is so intense that they proclaim themselves as the “Involuted Generation”, a buzzword which describes the pervasive feelings of burnout, ennui and despair for being locked in an endless competition that one ultimately knows is meaningless.

 

Facing a bleak job market in the mainland and taking into account the substantial nominal income gaps between Hong Kong and that of leading mainland cities (In 2022, Hong Kong’s median monthly income were estimated to be three times than Shanghai’s), mainland youth, both the elites and the less qualified, might find the Hong Kong government’s recent relaxed labour and immigration policies to be reasonably alluring. In fact, “Top Talent Pass Scheme” and “Hong Kong Imported Labour” have become a hot topic on Little Red Book immediately after Hong Kong announced the plans. 

 

Understandably, there are local concerns about whether the city would be overflooded with more talents and low-wage workers than the local economy can absorb, fielding jobs for which Hongkongers are qualified and available. There are also pervasive anxieties that employers would be disincentivised to ameliorate their employees’ wages and benefits as they can now easily resort to mainland substitutes who are cheaper and more accommodating. On the skilled professional market, it is deduced that the competition for high-paying jobs would be increasingly intensified, placing the local youth at risk of being outcompeted by the mainland elites settling through the Top Talent Pass Scheme (TTPS), which grants elite graduates from top 100 universities unrestricted rights to work and settle in Hong Kong. 

 

The government has introduced a series of measures to protect local employment: 1) Employers must maintain the ratio of full-time local workers to imported workers at two to one; 2) The wage levels of imported labour must be no less than the median wage in the market; 3) Employers are required to commence a four-week local recruitment process before processing their applications to import foreign labour; 4) Employers shall pay the Employees Retraining Levy of HKD 400per imported employee per month, which would be spent on augmenting the provision of training and retraining for local labour.

 

Yet, the government assurances are deemed inadequate by local labour representatives and economists. Median wages are not static and would instead change with the ups and downs in demand and supply. With an upsurge in labour supply, which could be enlarged by up to 50%, it will give employers greater leverage to lower the offered wages, pushing down the median wage levels. This will, in effect, compel the local employees to make a compromise by accepting inferior salary packages in order to be recruited for or retained at their positions. It is dubious whether the four-week local recruitment could make an effective mechanism to prioritise filling job vacancies with local workers. What if the employers deliberately wish to hire imported workers from the start because of their weaker bargaining position and reduced labour cost, and half-heartedly conform to the local hiring process as a formality? The increased budget for local labour training and retraining should not be seen as an extra benefit, as it is funded by the employers’ reduced manpower cost after labour importation. 

 

IV.   Intensified Vulnerability of the Grassroots 

As a financial hub, Hong Kong’s economy has always been susceptible to global trends and fluctuations. Despite the fact that Hong Kong still outperforms many advanced economies currently, its economy has endured consecutive contractions in the past four years. China’s stagnant economy and global recession also cloud the city’s economic prospects with added uncertainties. 

 

Imported labour tends to be positively correlated and interacted with economic cycles: In good times, they would complement the local workforce, lure investments and grow the economy, which in turn, creates more jobs for the locals; In bad times and without adequate government interventions to secure local interests, they could stifle employment for local workers as the labour market shrinks. With the possibility of a global economic depression looming, the Hong Kong authorities’ unorthodox approach to import waves of unskilled or low-skilled labour at an unprecedentedly large scale, rather than incrementally, appears to be impetuous. It has also intensified anxieties among grassroots workers and housewives, who are projected to be among the most vulnerable facing the massive influx of cheap imported labour. Quoting Ms Jenny Tam Kam Lin, another employee representative at the Labour Advisory Board, “Many women and grassroots workers rely on these 26 occupations. If the authorities lift the ban in one go, when society is still on its way to [post-pandemic] normalcy, this may bring a huge hit to local workers.” Taking a look at the government-listed 26 job occupations to be open for importation this September, the majority, if not the entirety (which features washer, waiter, receptionist, cashier, salesperson etc.), are traditional employment reserve options for local workers in the face of financial hardships or unanticipated lay-off. The government gestures thus leave the underprivileged little room for manoeuvre if the city’s economy takes a turn for the worse. 

 

It is envisaged that there will be a drop in salary across these affected industries and sectors. In fact, some industries have already endured the pain even before the arrival of imported labour. A non-franchised bus company has reportedly reduced its offered monthly salary to newly hired drivers from HKD 25,000 to HKD 20,000, which amounts to a 20% drop, one week after the Hong Kong government announced its labour importation scheme in the transport sector. 

 

V.    Preferential Treatment? Local Bitterness towards the Housing Crisis 

The government’s accommodation arrangement for imported workers may put the local workers at a comparative disadvantage. According to the government’s proposal, it stipulates that employers must provide their imported workers with furnished accommodation and could deduct up to 10% of the wages payable to the imported workers to cover the housing expenses. While the government envisages that most imported labour will reside in central dormitories built in Hong Kong, it also permits the employers to provide cross-boundary accommodation for mainland imported labour or, in some circumstances, allow them to reside in their own residential premises, both being much more economical options.

The provision of free or low-cost accommodation is, in practice, imposing a take-home salary gap between local working class and migrant workers. It is not an exaggeration to say that Hong Kong residents face one of the most formidable housing crises in the world. A survey conducted in 2021 found that average Hong Kong citizens spend over half of their incomes on rent. The skyrocketing rent has forced approximately 220,000 of the city’s poorest into tiny, subdivided units infamously known as the “cage homes”. Being waived of the rental burden, it is deduced that migrant labour could earn at least one-third more than, or at best, double the spendable income of their local colleagues working on the same job. It is not surprising that some netizens are lamenting about the local’s inferior housing conditions on the territory’s flagship online discussion forum, LIHKG. Some also question that if the government could be so swift in building dormitories for migrant workers, why is it that similar gestures have not been made to house those living in cage homes?

 

Comparatively, Singaporean’ housing conditions are much less affected by imported labour and expatriates. While the city state’s private home prices have surpassed Hong Kong as the most expensive in Asia-Pacific, the residential environment of locals is safeguarded by the segregation of private and public housing systems. Singapore’s public housing estates, HDB flats, are home to over 80% of Singapore’s resident population, with about 90% owning their flats. Only Singapore citizens have the privileges to buy, rent or lease their HDB flats, while permanent residents (PR) only have the option to buy an HDB resale flat. With this strict segregation implanted, most expatriates and PRs would have to search for accommodation in the private market, while the lower-skilled labour is crammed into government-built central dormitories.

 

The Bottom Line  

The Hong Kong government’s recent imported labour policies have faced criticisms from both pro-Beijing and pro-democracy groups. The "Announce First, Consult Later" actions of the government are not only seen as inappropriate but also diminish the credibility that government policies would protect local interests. This lack of credibility is further exacerbated by a lack of political accountability in the territory. With the current youth unemployment crisis in Mainland China, it is reasonable for some locals to fear that the new policies would lead to Hong Kong being overflooded with more talents and low-wage workers than the local economy can absorb. And while imported labour policies could complement the local workforce and contribute to economic growth, if handled poorly, such policies could also stifle employment for local workers, with the first hints of drop in salary across affected industries already appearing. With Hong Kong's housing prices already being one of the most unaffordable in the world, the provision of low-cost accommodation to imported labour could also be seen by locals as an unfair preferential treatment. With these factors in mind, it appears that the Hong Kong government has failed to provide adequate assurances to protect local interests in comparison with its Singaporean counterpart, causing severe trepidation against the new policies among locals.

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