Unemployment rate

Hong Kong unemployment rate (1981 - 2017)

Unemployment rate remained low in early 1990’s, it even dropped below 2%. After Hong Kong was handed over from UK to China in 1997, unemployment rate rose significantly. It is caused by the Asian financial crisis starting in 1997. Stock market crashed and the fixed exchange rate between Hong Kong dollars and US dollars was challenged by international financial speculators. Together with the fall of housing prices, the wealth of Hong Kong people decreased significantly.

Hang Seng Index (Hong Kong stock market index)

In 2003, we observed another hike in unemployment rate which is due to the outbreak of a deadly epidemic, Severe Acute Respiratory Syndrome. Tourists did not come to Hong Kong, people dared not eat out at restaurants. Unemployment rate jumped to over 8%.

A subway with just a few passengers during SARS epidemic in 2003.

High unemployment rate, deadly epidemic and ineffectual response by the government caused a massive protest in 2003. Over 1 million people went on to street to protest. Given a population of less than 7 million, the public protest is the greatest in the history of Hong Kong.

Protest in 2003

What can we learn from the unemployment rate data?

The unemployment during the downturn of the economy is mostly cyclical unemployment. A small economy like Hong Kong is particularly vulnerable to shocks, like the financial crisis in 1997 and the epidemic in 2003.

Unemployment rate is the most important indicator watched over by the government, as the public can feel the significance of a high unemployment rate. Meanwhile, the public may not feel so much about a higher GDP growth.

Government works hard to keep the unemployment rate low. Too high the unemployment rate can result in mass protest, which may lead to political unrest if it is not handled properly. Political stability is highly related to low unemployment rate.

Citations

https://content.time.com/time/photogallery/0,29307,1630252_1380335,00.html

https://www.hongkongfp.com/2017/02/19/pictures-hong-kong-2003-sars-epidemic/

https://finance.yahoo.com/quote/%5EHSI/chart?p=%5EHSI#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

https://tradingeconomics.com/hong-kong/unemployment-rate