From the Far Eastern Economic Review

THE GLOBAL DOWNTURN is hitting Hong Kong where it hurts ordinary people the most: in the job market. Unemployment looks set to rise in the next few months as companies respond to the slump by cutting costs. Adding insult to injury, some large local employers -- most notably HSBC -- have already begun to relocate some of their operations to China, where there is a plentiful supply of low-cost labour. There are strong indicators that many more will follow them.

But the fact that prospects in mainland China -- where economic growth is still being fuelled by domestic consumption and a massive government spending programme -- are not looking quite so grim could be an opportunity for Hong Kong job seekers, many of whom have precisely the kind of managerial skills that are scarce on the mainland.

Michael Tien, vice-chairman of the government-funded Employees' Retraining Board, told an unemployment forum on October 21 that those in search of jobs should begin to look beyond Hong Kong's borders. "Managerial talents are short in the mainland," said Tien. "And some firms are actually recruiting from Hong Kong."

A new survey of Hong Kong's employers by recruitment and human-resources consultants TMP Worldwide reinforces a sense of gloom about job prospects in Hong Kong, and shows that the slow migration of job opportunities to China is likely to continue.

Conducted just after the September 11 attacks in the United States and based on data gathered from several hundred managers across dozens of industries, TMP's quarterly Job Index Survey -- which examined Singapore as well as Hong Kong -- calculates the "net effect" of companies' employment expectations by subtracting the percentage which plan to cut jobs from the percentage which plan to hire more staff. In Hong Kong the net effect this quarter is 4%, down from 25% last quarter, and 60% at this time last year. "We are seeing the lowest levels of optimism since the Asian financial crisis," says Russell Yeomans, the Hong Kong-based director of TMP's Asia-Pacific operations.

The pessimism is spread unevenly across sectors. Hong Kong's business and professional services, together with travel and tourism, have been hardest hit, with expected reductions in personnel by 23% and 16% of companies respectively, while many companies in health care, pharmaceuticals and insurance say they have plans to continue hiring.

Things look rosier in China. TMP's survey confirms what myriad analysts have long predicted, that many companies are not simply slashing jobs but are shifting them across the border. "All of the Hong Kong companies are talking about China," says Yeomans. "They want to relocate resources to that sector."

The net effect for employment expectations in China is now 17%, a minimal decline from last quarter's 19%. It stood at 26% a year ago. TMP found that 50% of Hong Kong-based travel companies with operations in China plan to step up their recruitment in mainland China, as do 40% of the territory's manufacturing and construction companies.

Those willing and able to relocate to China will have a distinct advantage. For many job applicants, necessity begets flexibility. "Whereas in the old days, they may have been reluctant to move, they seem more willing now," says Nelson Poon, chief operating officer of recruitment Web site JobsDB.com. "The opportunities are so much greater in China that we have seen a large number of candidates more willing to go."

Employees who don't want to move to China and are looking to hold on to their jobs, or those recently retrenched and starting anew, should perhaps start by signing up for some more English classes. In the TMP survey, 17% of Hong Kong companies said spoken English-language skills were the most noticeably lacking, while a further 15% said that written English was the biggest problem. These figures do not sit very easily with Hong Kong's claim to being Asia's world city.

With many analysts predicting a turnaround no sooner than the third quarter of 2002, some of Hong Kong's workforce may soon face a difficult choice between relocating to the mainland and sitting out a looming recession at home. "Those unwilling to take up the opportunity to go to China will have a really tough time," says Poon. "The situation is deteriorating quite quickly."