Hong Kong Labor Market in the Aftermath of the Crisis: Implications for Foreign Workers

Abstract

Hong Kong suffered economically and socially from the Asian financial crisis. Due to the speculative attack on the Hong Kong dollar, which is pegged to the US dollar, businesses suffered from tight liquidity and high interest rates. The stock market as well as the property market plunged by more than 40 percent in less than nine months. Tourism and other consumption-related sectors such as retail and restaurants also suffered as a result of the depreciation of currencies in Japan and other Southeast Asian countries. Poor business performance led to mass lay-offs and retrenchment. However, the local workers rather than the guest workers were more adversely affected by the crisis. In spite of the guest workers' apparent marginality in the labor market, there have been hardly any reports of en masse retrenchment and repatriation of these workers. However, the chances of guest workers to obtain employment in Hong Kong may be on the downturn.