Jake's View | Shrinking workforce not all that it seems
As Japan has shown, an ageing population doesn’t have to mean low jobs growth, with Hong Kong’s over-65 labour participation rate now at 8.3pc
On the face of it they seem to have a case. It is becoming ever harder to squeeze more productivity gain out of this economy, either by pushing the workers harder or investing more money in their efforts, and economic growth is thus increasingly dependent on employment growth.
But Hong Kong's population is an ageing one and people drop out of the workforce as they grow older. Where then are we to get the employment growth and the consequent economic growth?
We have managed our way around the problem recently because, as the first chart shows, the labour force participation rate has gone sharply up over the past three years.
But this was only because many people have come back to work after drifting out of the workforce following the 2008-09 slowdown. The participation rate has now come back to its more normal levels and we will not get this boost any longer. Thus get ready to see long-term economic growth trend down to only 3.3 per cent.
