【Unemployment rate 5.9%】Consult with Dr. Luo Zhiguang, Director of the Labor and Welfare Bureau

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Written by: Review Editor

2020-06-17 13:00

The latest unemployment rate in Hong Kong rose another 0.7 percentage points to 5.9%, the highest level in more than 15 years. The Secretary for Labour and Welfare, Luo Zhiguang, released data on Tuesday (16th), stating that "the degree of deterioration has actually been alleviated by signs," describing the "employment protection" plan as effective. Although the official sent "Ding Xin Wan" is understandable, its argument is still debatable.

The unemployment rate announced by the government adopts a three-month moving average. The latest three figures are as follows:

January to March: 4.2%
February to April: 5.2%
March to May: 5.9%

Since the unemployment rate increased by 1 percentage point from February to April, and by 0.7 percentage points from March to May, Luo Zhiguang believes that "the degree of deterioration has actually been alleviated." This statement is correct in the data, but it is inferred that the "employment protection" program has slowed the growth of the unemployment rate. "When everyone expects that there will be subsidies for the "employment protection" program in June, will the employer's behavior change in May? What? That change—especially the degree to which the unemployment rate has deteriorated has been alleviated—obviously this expected effect has emerged,” the statement may not be appropriate.

Correlation does not mean cause and effect

The rate of increase in the unemployment rate slowed down from March to May. At about the same time, the government announced the "employment protection" plan in April. It accepted applications in May and promised to release funds in June. In time, it can be said that the two are related. But just as the introductory principle of social sciences and statistics "correlation does not represent causality", the two happen at the same time or one after the other. It may be purely coincidental or affected by other factors, not causation.

For example, Hong Kong's epidemic situation has improved markedly since late April. For the first time in May, there was no local infection for 14 consecutive days. Under this circumstance, citizens' economic activities increased, which helped companies reduce layoffs. Another example is that some enterprises may have a certain manpower requirement. After cutting down a certain number of employees, they tend to maintain the manpower, rather than continuing to lay off the same amount every month. Dr. Luo Zhiguang claimed that the "employment protection" plan had an "expected effect", and the degree of deterioration in the unemployment rate could be alleviated. I was afraid that I would take it too seriously.

Employees do not necessarily benefit

It is true that the number of employers applying for the first phase of the "employment protection" plan reached 168,000. The media quoted government sources as saying that it estimated that it covered 1.3 million employees. However, it has been known since the launch of the plan that employers receiving subsidies do not represent actual benefits for employees. If the employer has already paid more than half of the salary, the newly obtained subsidy can be used to subsidize the employer’s expenditure instead of actually increasing the employee’s income. For example, the majority of Cathay Pacific’s flight attendants are on unpaid leave, and may receive 60% or 70% of their monthly base salary. Under the “Guaranteed Employment” plan, even if the employer uses all the subsidies received to pay wages, these flights The discounted base salary for waiters may remain the same, but the result is that the employer saves money.

Even worse, unscrupulous employers can use the full amount of subsidies to subsidize the salaries of some people, while the remaining employees continue to be unpaid. Even if they do so, they still meet the requirements of the "employment protection" plan and are not counted as violations.

In addition, since the outbreak of the outbreak, employers have recruited hundreds of people. Many people have been arranged for unpaid leave for a long time, and their income has been greatly reduced or even lost. These tragic conditions have not been reflected in the unemployment rate. Director Luo, who has always refused to pay unemployment benefits, should at least conduct a comprehensive investigation to understand the various employer tactics and improve the current labor and welfare policy, even if he refuses to understand the public's urgent needs. As to how much the "employment protection" plan can actually benefit employees, and how many are only for "insurance companies", the Labor and Welfare Bureau should also make a rigorous and detailed review report. The reform of labor and welfare fully strengthened the protection of the citizens after the epidemic.

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