Living standards and competitiveness under threat, warns govt committee
By Li Xueying, The Straits Times, 1 Jun 2012
HONG KONG'S top-dog status as the world's most competitive economy could come under siege from a looming demographic threat: a workforce that is shrinking faster than expected.
The number is expected to contract to 3.49 million in 2029, from 3.77 million currently.
The 7.4 per cent decline may 'reduce the standard of living, weaken competitiveness and undermine the economic vitality of Hong Kong society', a government committee on population, led by Chief Secretary Stephen Lam, warned on Wednesday.
The sobering statistics were a dampener on Hong Kong's good showing in a global competitiveness report released the same day, which ranked Hong Kong first for the second year running. Meanwhile, Singapore slipped to fourth place, from third last year.
'The government should consider examining the merits and implications of encouraging the adoption of a higher retirement age,' Mr Lam said.
Hong Kong does not have a mandatory retirement age but the civil service - from which the private sector takes its cue - currently sets it at 60.
Two other prongs to tackle the challenge are to encourage more young people and women to enter the workforce and to import skilled foreigners.
The government will add 5,000 places in international schools in the next four years, said Mr Lam. Local universities will also be encouraged to expand their enrolment 'in order to take in overseas and mainland talents at an early stage', he added.
One reason for the revised population projection, revealed Mr Lam, is the impending ban on mainland mothers giving birth in Hong Kong. Their babies would have been entitled to residency.
But Mr Lam and incoming Chief Executive Leung Chun Ying - who is behind the ban - defended the move.
Mr Leung, noting that 170,000 children were born in Hong Kong to mainland parents in the past 10 years, said at a community event: 'When they will eventually come here, how many will do so, and what education and health-care resources will they need - all these pose a huge uncertainty for us.'
Professor Alfred Chan, who chairs a commission advising the government on policies related to the elderly, told The Straits Times another reason the accelerated demographic threat caught policymakers by surprise was that there was more outbound migration to China than expected.
'The mainland economy has grown faster, offering more career and business opportunities, than expected,' said the social gerontology expert at Lingnan University.
Looking ahead, Hong Kong has to gird itself for lower growth or even deficits, social unrest and a widening poverty gap, he said.
On whether the problem of a shrinking workforce can be tackled by boosting productivity, he said there are limitations to this strategy. Not all workers can move into industries with potential for productivity growth, such as finance and tourism.
Neither is immigration a long- term solution, he added. Instead, he called for 'an optional retirement arrangement' which allows old workers to continue working if they can, as well as 'an articulated policy-making machine at the top level' that will plan for their needs for the next 20 to 30 years.
- Consider ways to raise the retirement age for both public-sector and private-sector employees
- Encourage more young people and women to enter the labour market
- Import skilled foreigners, by reviewing the pull factors that could entice them to work in Hong Kong, for example
-Integrate mainland children who have Hong Kong residency, while stepping up surveillance on pregnant women at the borders
- Develop health-care infrastructure by reserving land for private hospitals, and encourage active ageing
Related
We're aging and shrinking fast -The Standard
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