Hong Kong stands at a critical juncture in its labor market evolution. With unemployment reaching 3.7 percent in July — its highest since November 2022 — and the restaurant sector particularly hard-hit at 6.4 percent, the chief executive’s upcoming Policy Address cannot afford to sidestep the twin challenges of labor importation and artificial intelligence. These issues demand immediate, comprehensive action that balances economic necessities with local worker protection.
The Supplementary Labor Scheme, introduced in September 2023, emerged from necessity rather than choice. The departure of significant numbers of residents created genuine labor shortages that threatened the business continuity. Singapore faced similar challenges and responded strategically with its Employment Pass system, attracting over 200,000 foreign professionals by 2024 while maintaining social stability. Singapore’s success demonstrates that properly regulated labor importation can enhance rather than diminish local opportunities — but only with robust safeguards for local workers.
Recent revelations about local workers being displaced cannot be ignored in the Policy Address. Fellow Legislative Council member Chau Siu-chung’s documentation of 200 cases in which full-time positions were converted to part-time arrangements following nonlocal-worker arrivals represents systematic violations requiring immediate remedy. Secretary for Labour and Welfare Chris Sun Yuk-han’s promise to “show no mercy” toward violating employers needs concrete backing through enhanced enforcement mechanisms that the Policy Address must detail.
The restaurant industry’s conflicting signals — with the Hong Kong Federation of Restaurants and Related Trades simultaneously calling for a pause while signing continuation statements — reflect a sector in crisis that requires nuanced policy intervention. The Policy Address should introduce sector-specific provisions acknowledging that while 30,000 nonlocal workers have been approved for the food service industry, local workers report dramatic income reductions. Denmark’s “positive list” system, which adjusts foreign-worker permissions based on real-time labor market data, offers a tested framework that the administration should adopt.
Hong Kong has successfully navigated numerous economic transitions by embracing change while protecting vulnerable populations. The Policy Address must prove we can do so again, transforming current challenges into opportunities for a more inclusive, competitive future
The AI dimension adds urgency to the Policy Address’s mandate. Microsoft’s recent study showing a 98 percent task overlap between AI capabilities and translator roles isn’t distant speculation — it’s present reality. When Geoffrey Hinton declares plumbers have more job security than knowledge workers, and 42 percent of American Generation Z workers pursue blue-collar careers despite holding degrees, Hong Kong cannot afford complacency. The Policy Address must articulate how the city’s workforce will navigate this technological disruption.
Shanghai’s response offers a blueprint worth considering. Their “AI Plus” initiative, allocating 50 billion yuan ($7 billion) for workforce retraining in 2024, demonstrates the scale of response required. The Policy Address should announce a comparable “Hong Kong AI Transition Fund”, building on the Innovation and Technology Commission’s training subsidies but with dramatically expanded scope. As Nvidia CEO Jensen Huang warns, “AI won’t take your job, but someone using it will.” Hong Kong workers need immediate support to become those AI-enabled professionals.
The Policy Address must also address enforcement gaps in the current system. Sources suggest the administration is considering requiring the 2-1 ratio of local to nonlocal workers be applied within specific job categories rather than across entire establishments — a critical reform to prevent gaming of the system. Additionally, permanent exclusion from nonlocal worker programs for repeat violators would send a clear deterrent message.
Furthermore, the Northern Metropolis development and the Guangdong-Hong Kong-Macao Greater Bay Area integration present opportunities the Policy Address should leverage. Rather than viewing nonlocal workers and AI as threats, the administration should articulate how these forces can catalyze Hong Kong’s evolution into the region’s premier high-value services hub. The Hong Kong-Shenzhen Innovation and Technology Park, now operational, could anchor new employment categories that didn’t exist five years ago.
The Policy Address should also introduce mandatory “Local Worker Impact Assessments” for any business seeking nonlocal worker approval. Singapore’s Workforce Singapore agency conducts similar evaluations, ensuring foreign-worker importation genuinely complements rather than replaces local talent. Combined with enhanced Labour Department on-site recruitment requirements already announced, this would create a robust protective framework.
Industry voices calling for indefinite extension of current arrangements must be balanced against rising unemployment figures. The Policy Address should announce a “sunset provision” with clear metrics: Nonlocal worker quotas automatically adjust downward when sector unemployment exceeds predetermined thresholds. This market-responsive mechanism would provide business predictability while protecting local workers during downturns.
The government’s talent admission programs have successfully attracted over 120,000 individuals, demonstrating Hong Kong’s continued appeal. The Policy Address should build on this success while ensuring local workers aren’t left behind.
The upcoming Policy Address represents a defining moment. Chief Executive John Lee Ka-chiu must articulate a vision that acknowledges legitimate worker anxieties while maintaining Hong Kong’s economic dynamism. Half-measures and postponements will only deepen uncertainty. The administration must demonstrate it understands that protecting local employment isn’t protectionism — it’s pragmatic governance that ensures social stability and sustainable growth.
Hong Kong has successfully navigated numerous economic transitions by embracing change while protecting vulnerable populations. The Policy Address must prove we can do so again, transforming current challenges into opportunities for a more inclusive, competitive future.
The author is the convenor at China Retold, a member of the Legislative Council, and a member of the Central Committee of the New People’s Party.
The views do not necessarily reflect those of China Daily.
