20 February 2019
A shrinking population could lead to less economic activity and thus fewer career opportunities for the young generation. Photo: HKEJ
A shrinking population could lead to less economic activity and thus fewer career opportunities for the young generation. Photo: HKEJ

Immigration: Why HK should keep the door open

In much of the US and Europe, and in some developed Asian economies like Japan or Singapore, immigration is a hot subject and, for many people, unpopular. In Hong Kong, it is not currently a big deal, but it is always a potential controversy.

As with most developed economies, Hong Kong people do not have enough babies to maintain if not grow our younger population. As a result, we rely on immigration if we want to ensure the size of our future work force and our economy.

This relationship between immigration and economic growth was recently highlighted in an op-ed piece in the New York Times.

Author Ruchir Sharma explained how productivity growth rates have become more similar in developed countries in recent decades. He thinks this is partly because of the cross-border influence of technology. Population expansion has increasingly become the main driver in maintaining American economic power.

One source of population growth is for people to have more babies and bigger families. But many people in developed economies prefer smaller families. In Hong Kong, the cost of housing and the pressure to get the best education are so high that people feel they cannot afford more than one or two kids. Whatever the reasons, policymakers around the world have found it hard to persuade people to have more babies. Immigration is therefore the main way to grow the work force.

The alternative is Japan, and to some extent Europe, where population growth has been slower than in the US. Sharma calculates that if the US had experienced the same population growth rate as Japan in the past 20 years, the US economy would now have a 15 percent share of the global economy, instead of the current 25 percent.

Of course, this is looking at the issue from a global and strategic point of view.

The current US government is now leaning toward a more anti-immigration policy. To opponents of immigration, it does not matter if the US has only a 15 percent share of the world economy. All that matters is whether Americans themselves are doing well.

Go to Japan, and you will see where this could lead – a nation in demographic decline. If you make a straight-line forecast based on its shrinking population, Japan in the long run will be a weaker and less influential country.

But it is also a very prosperous, stable society, with an enviable quality of life.

What does all this mean for Hong Kong?

Hong Kong does not have to worry about the link between the size of its population and its relative strength in terms of global power. (If we are concerned about our global influence, it would be as a part of China, which in fact also faces long-term demographic challenges.)

In theory, we could put our local population first and slash new immigration. The result would be less pressure for resources like housing, and school and hospital places. Our economic growth would slow down and in time the economy and the population would start to shrink.

If Japan is any guide, one problem would be attracting temporary migrant workers to look after the growing number of elderly. However, we would need fewer domestic helpers to look after younger families with children.

In theory, this is a valid option – our policymakers and the community should not be afraid to consider the pros and cons of it.

But I think many of us would find this a depressing prospect. It is a recipe for the end of Hong Kong as a success story.

I also think it would be unfair on our younger generation. A shrinking economic base in Hong Kong will mean fewer opportunities for them, and more incentives to leave. Indeed, the departure of skills and talent would possibly leave us with no choice but to open the doors to immigration again – or face a serious decline in incomes, tax revenues and actual living standards.

Far better, surely, for us to take a positive attitude toward immigration and the economic advantages we know it can bring.

There may be a case for lower numbers of less-skilled migrants. In fact, the numbers arriving on one-way (family reunion) permits have fallen in recent years, leaving some of the 150-a-day quota unfilled.

But the benefits of skilled and talented younger immigrants, from the mainland and overseas, are very real. Anyone involved in many business sectors, including financial services, other business services and technology, will know this from personal experience.

The continued influx of new talent and skills directly increases Hong Kong’s competitiveness and the whole city’s prosperity. Keeping the door open, and the living and working environment attractive, should be one of our top priorities.

– Contact us at [email protected]


Executive Council member and former legislator; Hong Kong delegate to the National People’s Congress

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