Hong Kong's jobless rate increased slightly to 3.5 percent in the February-April period, after declining to a 31-month low of 3.4 percent in the first quarter of the year, as job growth was outpaced by an increase in the labor force.

The rally, the first rise in 11 months, came after unemployed persons increased by around 7,400 to 131,900 in the period from 124,500 in January-March, the department said on Thursday.

Besides, the underemployment rate also rose from 1.8 percent to 1.9 percent, with underemployed persons increasing by around 2,600 to a total of 68,900, the government said.

Total employment increased by around 8,200 to 3.585 million in February-April, while the labor force increased by around 15,700 to 3.717 million over the same period.

"The employment increased notably amidst continued robust economic growth and positive hiring sentiment in the corporate sector. However, this was outpaced by an even bigger increase in the labor force," Secretary for Labour and Welfare Matthew Cheung Kin-chung noted, explaining the rise in the unemployment rate.

"More (jobless) people were attracted into or came back to the labor market as the economic momentum stayed strong in the first quarter. This contributed to the increase of the jobless rate," said Irina Fan, a senior economist at Hang Seng Bank, adding that the implementation of the minimum wage - which came into effect on May 1 - could have also boosted the number of job seekers in the job market.

The increases in the unemployment rate were mainly seen in the arts, entertainment and recreation fields, the import and export trade and wholesale sectors; while the increases in the underemployment rate were seen in the arts, entertainment and recreation, as well as the construction sector.

Regarding the short-term outlook, Cheung said labor demand is expected to remain firm in light of the latest economic data and survey feedback.

"Since April 2010, the number of new private sector vacancies received by the Labour Department per working day has stayed at a high level of about 3,000 on average. Entering May this year, this level has been maintained," he said.

But he expects school leavers and new entrants induced by the minimum wage will accelerate the growth in labor supply in the next few months.

"The impact on unemployment will depend on the pace of job creation relative to the growth in labor supply," Cheung said of the effect of the minimum wage. The government introduced the HK$28 per-hour minimum wage on May 1.

Hang Seng Bank's Fan foresees a slowdown in job creation in the coming months along with the economy, as the growth momentum may have "peaked out" in the first quarter.

Paul Tang, chief economist at Bank of East Asia, also expects a slowdown in hiring in the near future. However, he predicted that the unemployment rate would decline to a level near 3 percent in the second half of the year, driven by the further economic recovery of the United States and Europe.

China Daily

(HK Edition 05/20/2011 page2)