Generation 40s – 四十世代

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What tiny Luxembourg can teach ageing Hong Kong about labour mobility in the Greater Bay Area

CommentInsight & Opinion

Lucy Kwan and Rex Wong Yat Chun say Luxembourg can be a model for Hong Kong as it tackles a static demographic and labour structure. Hong Kong must take advantage of its closeness to the Pearl River Delta by embracing openness through the flow of ‘frontier workers’


Hong Kong is faced with a labour mismatch problem. Industries such as construction and catering complain of chronic worker shortages, while Hong Kong’s youngsters are encouraged to choose a “decent” career in our pillar industries. Our education system, therefore, oversupplies white-collar workers but undersupplies blue-collar workers, who are seen to have less bright socio-economic prospects. As a result, our talent pool is imbalanced and cannot react according to the actual needs of industries.

Many developed cities in the world can draw their talent pool from surrounding areas. However, Hong Kong is special. Currently, there seems to be a lack of concerted and proactive efforts to increase labour mobility in both directions. Hong Kong should form a conurbation with neighbouring cities so that citizens within the economic circle can freely move from their residence to their workplace.

The completion of the Hong Kong-Zhuhai-Macau bridge and the high-speed railway may realise such a vision. Luxembourg gives us a template.

Despite limited space and population, Luxembourg is one of the world’s most influential financial centres. On aggregate income per capita, Luxembourg ranks among the top economies in the OECD group of wealthy nations. Such economic miracles would not have been achieved if only locals were involved. In fact, nearly half of its population of just 500,000 are foreigners. Moreover, nearly half of the total national employments (more than 170,000 workers) involve “frontier workers”, that is, they reside in neighbouring countries and commute to work, usually daily.

The Luxembourg government has made huge efforts to facilitate cross-border employment. For example, frontier workers can come and go without any restriction if they are European Union or European Free Trade Association nationals. If they are third-country nationals, they must hold a valid work permit issued by certain countries, as well as a valid Luxembourg employment contract bearing a clear statement from their Luxembourg employer that they work for a specific number of days of the month.

Cross-border workers pay taxes in Luxembourg for income generated within the country. To avoid double taxation, Luxembourg has agreements in place with its three neighbours, France, Germany and Belgium. Cross-border workers in Luxembourg pay their part of social security in Luxembourg just like residents, which is lower than in the three adjacent countries.

Luxembourg’s success exemplifies the realisation of a high degree of cross-border mobility. It suggests a bright future for the integration of the labour markets in Hong Kong and adjacent cities such as Shenzhen, Macau and Zhuhai. These four southernmost cities in the “Guangdong-Hong Kong-Macau Greater Bay Area” could become the core of the area, and our labour markets would complement each other and be integrated. From Hong Kong’s perspective, industries such as construction and catering could employ workers from our neighbouring cities.

Also, our university graduates would find many more opportunities in the region and it would be easier for them to go where they are both needed and valued.

Hong Kong’s economic and social issues resulting from an ageing population and static growth might be more easily solved.

To facilitate such mobility, we should first accelerate the development of new commercial and residential areas near the border, namely the North Lantau New Town, the Lok Ma Chau Loop area, and the Northeast New Territories.

It would hopefully become a commercial area that would attract companies, especially technology start-ups, to set up their headquarters. Also, the number of border control points and their capacity to handle the rising traffic volume should be expanded.

Secondly, the social security and taxation system for frontier workers within the region should be harmonised.

Workers may live on the mainland but still enjoy the best business environment in the world, including favourable tax rates, simple registration procedures and the established legal protection in Hong Kong.

Hong Kong’s competitiveness does not come from natural resources, but its people. We need a vibrant and flexible talent pool to sustain our unique competitiveness. Therefore, we should not turn a blind eye to our static and ageing demographic and labour structure. Our proximity to the Pearl River Delta gives us a geographical advantage in supporting our economic growth as well as exerting our influence.

Lucy Kwan is an honorary assistant professor at the Department of Statistics and Actuarial Science at the University of Hong Kong. Rex Wong Yat Chun is a third-year student majoring in economics and finance at HKU


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Why diversity is under threat in Hong Kong’s post-secondary education sector

CommentInsight & Opinion

Ho Lok Sang says with more establishments offering degree courses at the expense of vocational training, the coming decline in student numbers may kill off private tertiary institutions unable to vie with government-funded ones

The rapid expansion in Hong Kong of degree placements by self-financing institutions and self-financing arms of subsidised institutions has led to notable “achievements”, according to the government. One document says: “There are now about 150 and 300 self-financing post-secondary programmes at undergraduate level and sub-degree level … vis-à-vis around 40 and 230 such programmes respectively in 2005-06”.

But there is an excessive orientation towards academic degrees and inadequate attention placed on vocational development. Even the Vocational Training Council (VTC) is increasing its emphasis on degree programmes.

A healthy tertiary education sector should offer diversity, innovative pedagogy, plus strong links to industry and other sectors of society. The council is a massive organisation, and by offering degree programmes, it threatens the existence of courses run by private institutions without government funding.

If diversity is to prevail, we need a policy to ensure a level playing field. VTC-run degree programmes enjoy an unfair advantage, and government-funded institutions enjoy an unfair advantage due to branding and far superior infrastructure like libraries and IT facilities. If they run certain programmes, it would make sense to focus on niche areas that don’t overlap with those run by private institutions. If they run similar programmes, there should be quotas.

The winner-takes-all problem will become more acute in the next few years, as the number of secondary education graduates dwindles, leaving too few candidates to sustain all the current suppliers.

One may say: why not let competition eliminate those that cannot compete? This is based on the assumptions that the competition is fair and having far fewer players is desirable. Both are misplaced.

Both the VTC and University Grants Committee-funded universities are government funded to perform designated functions, but have ventured into areas beyond their original missions and enjoy significant advantages. The competition for survival could eliminate worthy players offering unique programmes. They could fail not because their programmes are not good enough, but because of the psychology to opt for stronger market players.

Even if eliminating some players is necessary, without a policy mitigating the winner-takes-all tendency, there will be too few players. We would lose the diversity driving innovation and offering students more choice in terms of programme design, pedagogy, location of classes, institutional culture and connectivity.

Ho Lok Sang is dean of business at Chu Hai College of Higher Education