Hong Kong’s unemployment rate in June to August stands at 3.7 percent, with the SAR government attributing this slight uptick to fresh graduates entering the workforce. It’s a familiar refrain, repeated annually when graduates flood the job market between May and July. But this year’s explanation raises a critical question: Why hasn’t this seasonal phenomenon caused similar spikes in unemployment in the past?

Some analysts argue that the underlying issue lies in the special administrative region’s weakened economy, with sectors like construction, retail, and food and beverage suffering the most. But from a youth employment perspective, we must ask: How many Hong Kong residents genuinely aspire to careers in these fields?

The truth is, most graduates — regardless of academic achievements — seek high-value, white-collar, or professional roles. This aspiration is deeply rooted in societal beliefs, passed down by parents who saw university degrees as a ticket to upward mobility. In the early 1990s, degree holders made up only 15 percent of the workforce. By 2024, this figure had ballooned to 51 percent, fueled by government investment in higher education and growing opportunities at self-funded institutions. Alternative pathways, such as associate degrees and overseas study, have pushed the percentage of degree holders even higher, and projections suggest it could soon reach 60 percent.

This raises a pressing question: Does Hong Kong’s job market need so many degree holders?

Changing value of credentials

The COVID-19 pandemic and rapid advancements in artificial intelligence have disrupted the labor market, intensifying employers’ challenges in finding suitable talent. In response, lifelong learning and micro-credentials have been promoted as the solution. Many employees, especially those in leadership roles, have been led to believe that accumulating more qualifications will guarantee access to better jobs.

As a result, Hong Kong is becoming a society drowning in credentials. Degrees, diplomas, and certifications are marketed as pathways to success, yet employers increasingly prioritize job-ready candidates with the right skills. Skills-based hiring, which emphasizes individual capabilities over academic qualifications, has emerged as a significant trend.

According to a recent report by Workday, 91 percent of Hong Kong leaders agree that adopting a skills-based hiring approach can drive economic growth by improving productivity, innovation, and agility. Over half (57 percent) of local organizations have already transitioned to skills-based strategies, with another 20 percent planning to do so this year. This signals a paradigm shift: Employers value skills over credentials.

At the same time, the rising costs of higher education exacerbate the disconnect between education and employment. Tuition fees for master’s programs in Hong Kong have soared by as much as 50 percent — nearly HK$100,000 ($12,873) — in just three years, raising questions about affordability and the diminishing returns of academic qualifications.

The need for mindset change

Universities must take a more active role in bridging the gap between education and employment. Employability, as defined by Yorke (2004), is “a set of achievements, skills, understandings, and personal attributes that make graduates more likely to gain employment and succeed in their chosen occupations.” Yet, universities often prioritize research output in world-class academic journals over quality teaching due to global ranking pressures, leaving the job of equipping students with employable skills to career service offices, which typically are understaffed and under-resourced.

Faculty members, if they can afford the time, can play a transformative role by collaborating with employers to align curricula with industry needs. Integrating real-world challenges into coursework and designing assessments that mimic workplace scenarios will better prepare students for the demands of the modern workforce. However, this requires universities to incentivize teaching and place employability at the heart of their job descriptions.

The rising unemployment rate among fresh graduates is a wake-up call: The value of degrees is diminishing as graduates struggle to meet employers’ expectations. To address this growing disconnect, universities must embed employability into their core mission, employers must fully embrace skills-based hiring, and students must take proactive ownership of their career readiness

Students, too, must adapt to the realities of a shifting labor market. A degree is no longer an automatic ticket to a high-paying job. From their freshman year, students should focus on building practical skills, gaining hands-on experience through internships, and cultivating a growth mindset. Employers increasingly value adaptability and problem-solving abilities over traditional qualifications.

Employers are also stepping up. Companies like MTR Corp, CLP Power Hong Kong Ltd, McDonald’s Corp and AS Watsons have established their own academies, offering programs from Level 2 to Level 5, aligned with Hong Kong’s Qualifications Framework. These initiatives help ensure recruits and newly promoted employees acquire the necessary job-specific skills needed to succeed.

Finally, society must reconsider its perception of success. With the rise of skills-based hiring, roles that do not require university degrees should no longer be viewed as inferior. Graduates should feel empowered to explore diverse career paths that align with their strengths, even if these roles fall outside traditional white-collar norms.

Hong Kong’s labor market is at a crossroads. The rising unemployment rate among fresh graduates is a wake-up call: The value of degrees is diminishing as graduates struggle to meet employers’ expectations. To address this growing disconnect, universities must embed employability into their core mission, employers must fully embrace skills-based hiring, and students must take proactive ownership of their career readiness. 
 

The author is a senior lecturer of marketing at the Hang Seng University of Hong Kong.

The views do not necessarily reflect those of China Daily.