When Financial Secretary Paul Chan Mo-po delivered the 2026-27 Budget, the local headlines were understandably dominated by the sheer scale of the figures. However, beyond infrastructure spending and financial incentives, the most critical component of a budget is not the hardware but the “software” — the human capital required to operate it.
For years, Hong Kong has poured billions of dollars into the hardware of innovation. It has built the Hong Kong Science Park, the Cyberport, and commenced development of the San Tin Technopole. Yet a smart city cannot function at its best without smart residents, and a digital economy cannot thrive without a digitally literate workforce.
The unveiling of Upskill Hong Kong, the rebranding and strategic restructuring of the Employees Retraining Board (ERB), marks a pivotal moment. It signals that the special administrative region government finally recognizes that in the race for global competitiveness, the quality of the workforce is just as vital as the sophistication of the market.
Historically, Hong Kong’s approach to training was remedial. The ERB was designed primarily as a safety net for the unemployed and grassroots workers. This stands in stark contrast to Singapore, where the SkillsFuture Singapore initiative has long treated mastery of skills as a national imperative for every citizen, regardless of employment status.
The 2026-27 Budget bridges this gap. By shifting the ERB’s philosophy from “employment-based” to “skills-based” and raising the education-level cap for participants, the government is acknowledging that in the era of artificial intelligence, obsolescence threatens accountants as much as assembly-line workers. The allocation of over HK$3.6 billion ($460 million) to reskilling measures is a significant commitment and signals a dramatic shift in the government’s approach to ensuring the relevance of its labor force to the workplace’s requirement of increasing sophistication.
But money alone does not guarantee success. The challenge now lies in execution and ecosystem building. The budget’s specific focus on “AI Training for All” is particularly relevant and timely. With HK$50 million allocated to public AI education and another HK$100 million to the AI Efficacy Enhancement Team to drive digital transformation, the government is aiming to popularize technology use.
This mirrors the strategy seen on the Chinese mainland, where digital literacy is often pushed from the top down. In Hangzhou, for example, smart-city adoption accelerated because the population was educated on the city’s interface.
For Hong Kong, the stakes are high. The civil service must lead by example. If the AI Efficacy Enhancement Team can successfully accelerate digital transformation within the public sector, it will send a strong signal to the private sector that the digital shift is nonnegotiable.
Innovation is not just about unicorns and initial public offerings; it is about the average worker’s agility in adapting to change. If Upskill Hong Kong can successfully instill a culture of lifelong learning similar to that of our regional rivals, the dividends will be far greater than any infrastructure project
Nowhere is the need for reskilling more evident than in the construction sector. The 2026-27 Budget injects a massive HK$1.4 billion into the Construction Innovation and Technology Fund. We are incentivizing companies to buy construction robots and adopt Building Information Modelling.
However, buying a robot is the easy part. The bottleneck lies in finding a technician who can program, maintain, and collaborate with that robot. The budget’s provision for the Construction Industry Council to provide robotics training is a step in the right direction, but we must ensure these programs are agile. Technology evolves faster than a four-year university degree curriculum.
This is where the “stackable microcredentials” proposed under Upskill Hong Kong become essential. In Silicon Valley, tech giants often value a specific, verified skill set over a generalist degree. Hong Kong’s employers must be encouraged to adopt a similar mindset. The government should ensure that these new microcredentials are rigorously mapped to the Qualifications Framework to retain their currency in the job market.
Hong Kong is neither Silicon Valley nor Singapore, but we can learn from both. Singapore’s success with SkillsFuture relies heavily on a tripartite partnership between the government, unions, and employers.
While the Hong Kong SAR government is taking a more active role in shaping labor-market outcomes through targeted employment incentives, it cannot do this alone. The private sector must step up. The 2026-27 Budget records that the Re-employment Allowance Pilot Scheme has, since its launch about 18 months ago, generated over 37,000 placements. This strong uptake indicates that, when incentives are aligned, employers appear more willing to hire.
However, hiring is not upskilling. The government must ensure that the subsidies provided, whether through the Employment Program for the Elderly and Middle-aged, are tied to tangible skills transfer rather than just headcount.
The 2026-27 Budget plants the seeds for a comprehensive talent ecosystem. By expanding the ERB’s mandate to serve the entire workforce and integrating AI into vocational training, the government is finally addressing the “software” deficit.
Innovation is not just about unicorns and initial public offerings; it is about the average worker’s agility in adapting to change. If Upskill Hong Kong can successfully instill a culture of lifelong learning similar to that of our regional rivals, the dividends will be far greater than any infrastructure project.
The hardware is built. The funding is allocated. The burden now shifts to execution. If Hong Kong can harness this opportunity to upgrade its greatest asset, its people, our transition to a high-quality, digital economy will be assured.
The author is a co-founder of Brandstorm Communications, a consultancy specializing in education, philanthropy, innovation and technology.
The views do not necessarily reflect those of China Daily.
