26 October 2016
Short-sightedness and mutual distrust between employers and employees are creating a vicious circle in the labor market. Photo: HKEJ
Short-sightedness and mutual distrust between employers and employees are creating a vicious circle in the labor market. Photo: HKEJ

Short-sightedness in the job market

In recent years, many local and foreign companies often complained that they had difficulty filling jobs in Hong Kong due to lack of available talent.

According to the firms, the failure of the city’s education system had led to a sharp decline in the language competence and a lack of common knowledge among young people, resulting in a skills gap in the labor market.

But is it really true?

According to the golden rule of demand and supply in the free market, as long as you are willing to offer high pay, attractive benefits and a good working environment, there will always be someone that can fulfill your requirements.

The hard truth is that companies on one hand keep whining about having difficulty hiring the right persons, but on the other salary levels have remained stagnant, if not gone down, leading to a peculiar phenomenon: there are many jobs on the market but just nobody applies for them.

And some companies are unwilling to hire people they consider overqualified, while some people would rather stay idle at home than find a job.

Obviously, the job market is malfunctioning. So is it because employers still fantasize about getting the best people with the least money?

Professor Peter Cappelli of the University of Pennsylvania, who has pioneered the concept of the “Skills Gap”, pointed out roughly 20 years ago that the general criteria for hiring new employees for most companies were simple: “attitude came first”.

In those days, as long as job applicants had a good attitude towards work and were willing to learn, they could usually get the job regardless of their qualifications, and most employers were willing to provide them with on-the-job training.

The productivity of these rookies might seem inadequate relative to their salaries at the beginning, but once they get the hang of their job they would start to make profits for their employers.

Unfortunately, nowadays things have changed, and both employers and employees have become increasingly short-sighted.

Employers want to hire experienced, productive staff but are not willing to pay up. Meanwhile, employees are always on the lookout for higher paying jobs.

Among employers, the greater the experience on staff-job-hopping, the more reluctant would they be about providing training or investing in their employees, thereby creating a vicious circle.

In Hong Kong, things are even worse due to the burden of skyrocketing rents. As small businesses just can’t afford to pay their staff more, let alone spend time and money to train them, all they want is someone who can get the job done immediately.

And now, even the bigger companies are following suit.

This article appeared in the Hong Kong Economic Journal on Aug 17.

Translation by Alan Lee

[Chinese version 中文版]

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