20 February 2014

1

Hong Kong’s Future

Population and

Manpower Needs

to 2030

This report is NOT about

Crystal-balling the states of the world and economy

Predicting in detail about the future

Making specific recommendations that the Government can

adopt immediately

This report is about

What Hong Kong’s demographic profile may look like in

2030

What effects this will have on the society and economy

What strategies can be adopted to achieve the best possible

outcome

What This Report is about?

2

Objectives

To examine Hong Kong’s future population and manpower needs

to 2030

To critically review the available evidence on population dynamics in

Hong Kong and their impact on the growth of the labour force

To map out areas of future direction in order to secure and nurture a

population that sustains Hong Kong’s long-term competitiveness

Methodology

Desktop research

Collecting different views through attending various forums

Conducting in-depth interviews

Conducting focus group meetings

Study Objectives and Methodology

3

The Problem in a Nutshell

Low fertility rate

High dependency ratios

Shrinking labour force

Increasing challenge with attracting and retaining talents

Declining economic productivity

Declining GDP per capita

Increasing government expenditure but decreasing revenue

Deteriorating quality and quantity of public services

4

Low Fertility Rate

Total fertility rate consistently well below the replacement level of

2.1 children per woman (1.19 in 2031)

5

1.20

1.18

1.19 1.19 1.19

1.17

1.18

1.18

1.19

1.19

1.20

1.20

1.21

2011 2016 2021 2026 2031

Ra

te

Year

Projected Total Fertility Rate

Source: Hong Kong Population Projections 2012–2041, C&SD

0

High Dependency Ratios

High overall dependency ratio, mainly elderly-driven

In 2031, 1,000 persons aged 15-64 supporting 578 persons

aged＜15 and ≥65

6

333

437

578

177

272

418

155 165 161

0

100

200

300

400

500

600

700

2011 2021 2031

De

pe

nd

en

cy R

ati

o

Year

Overall dependency ratio

Elderly dependency ratio

Child dependency ratio

Source: Hong Kong Population Projections 2012–2041, C&SD

Shrinking Labour Force

3,712,600

3,519,700 (51.9%)

3,400,000

3,450,000

3,500,000

3,550,000

3,600,000

3,650,000

3,700,000

3,750,000

La

bo

ur

Fo

rce

Year

Projected labour force

Labour force will peak at 3.7 million in 2018 then decline to

3.5 million in 2031

Labour force participation rate will decrease from 60.0% in 2013 to 51.9% in 2031

Need some 500,000+ labour to maintain the 2013 labour force participation rate at

60.0%

7

Projected labour force participation rate+549,300

4,069,000

(60.0%)60.0%

Source: Updated Hong Kong Labour Force Projections for 2013 to 2041, C&SD

0

What We Should Do?

Immigration and Integration

Organic Growth

Pan-Greater Pearl River Delta Integration

Planning for the Elderly

Financial Planning

8

Immigration and Integration

Encourage immigration

9

28,625

19,154

8,105

6,756

3,804

502

298

0 10,000 20,000 30,000 40,000

Employment Visas under 'General Employment Policy'

Dependent Visas

Employment Visas under 'Admission Scheme for Mainland Talents and Professionals'

Visas under 'Immigration Arrangements for Non-local Graduates'

Entry Visas under 'Capital Investment Entrant Scheme'

Entry Visas under 'Working Holiday Scheme'

Quotas Allotted under 'Quality Migrant Admission Scheme'

Selected Visas / Entry Permits Issued 2012

Source: Annual Report 2012, Immigration Department

Immigration and Integration (Cont’d)

Move Hong Kong into a real global city model

10

Born in Mainland/Macao/Taiwan:

2,267,917(32.1%)Born in

Hong Kong: 4,278,126 (60.5%)

Born Elsewhere:

525,533 (7.4%)

Hong Kong 2011

Source: 2011 Population Census, C&SD

Immigration and Integration (Cont’d)

11

Born

Elsewhere:

3,136,592

(37.6%)

Born in US:

5,200,105

(62.4%)

New York City 2012

Born

Elsewhere:

2,998,264

(36.7%)Born in UK:

5,175,677

(63.3%)

London 2011

Sources:

2012 American Community Survey, US Census Bureau

2011 Census, UK Office for National Statistics

2011 National Household Survey, Statistics Canada

Born

Elsewhere:

973,595

(42.7%)

Born in

Canada:

1,307,105

(57.3%)

Vancouver 2011

Immigration and Integration (Cont’d)

Marginal increases in fertility due to increasing presence of migrant

groups

Emphasis on integration of immigrants

Instill a greater sense of belonging to help reduce the churn rate

12

Source: The Fertility Trend in Hong Kong, 1981 to 2012, C&SD

Births to

Mainland

Women:

33,199

(36.3%)

Births to

Hong Kong

and non-

Mainland

Women:

58,359

(63.7%)

Births in HK 2012

Immigration and Integration (Cont’d)

13

Fertility rate:

Samoa 4.63

Iraq 3.36

Lebanon 3.98

Syria 3.61

Pakistan 3.50

Top five countries:

Poland, Pakistan,

India, Bangladesh and

Nigeria

Sources:

Childbearing of UK and Non-UK Born Women Living in the

UK, 2011, UK Office for National Statistics

TABLE 9: Births, Country of Birth of Parents, Australia –

2012, Australian Bureau of Statistics

Births to non-UK-

born women:

196,000 (24.3%)

Fertility rate: 2.28Births to UK-born

women:

612,000 (75.7%)

Fertility rate: 1.89

Births in UK 2011

Births to non-

Australian-born

women:

97,653 (31.6%)

Births to

Australian-born

women:

211,570 (68.4%)

Fertility rate: 1.95

Births in Australia 2012

Immigration and Integration (Cont’d)

Type II babies and their parents are assets

14

0

10

20

30

40

50

60

70

80

90

100

3% 5% 4% 6% 2% 4% 1% 3% 1% 3% ＜0.5% 1%

66% 67%

48% 50%

37% 39% 33% 35%

31% 32% 26% 29%

31% 28%

44% 43%

59% 55% 63% 60%

60% 59% 61% 59%

＜0.5% 1% 3% ＜0.5% 2% 1% 3% 2% 7% 5% 12% 11%

Pro

po

rtio

n

Survey

%

Fathers Mothers

Education Level of Parents of Type II Babies 2007 - 2012

Unknown

Post-

secondary

Secondary/

Matriculation

Primary or

below

Source: Survey on Babies Born in Hong Kong to Mainland Women, C&SD (2007 - 2012)

Immigration and Integration (Cont’d)

Spend resources on promoting Hong Kong to our emigrants

15

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

198

0

198

1

198

2

198

3

198

4

198

5

198

6

198

7

198

8

198

9

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

Po

pu

lati

on

(N

um

be

r)

Year

Estimated Number of Emigrants from Hong Kong 1980 - 2011

Total: 825,600

Source: Yearbook, Information Services Department (1981 - 2012)

Immigration and Integration (Cont’d)

Foreign Domestic Helpers (FDHs)

Secure more supply

Maximise the potential of skilled FDHs enabling them to provide care to

needy elderly after recognised training

16

Primary and

below:

21,589

(16.7%)

Secondary/

Sixth Form:

99,432

(76.8%)

Post-

secondary:

8,451

(6.5%)

Female Indonesian FDHs by Educational Attainment 2011

Primary and

below:

3,669

(3.2%)

Secondary/

Sixth Form:

80,563

(69.7%)

Post-

secondary:

31,412

(27.2%)

Female Filipino FDHs by Educational Attainment 2011

Source: 2011 Population Census, C&SD

Organic Growth

Hong Kong is part of the developed-world trend where people simply

decide to have less children

17

3.29

1.03

0.5

1

1.5

2

2.5

3

3.5

1970-1975 1975-1980 1980-1985 1985-1990 1990-1995 1995-2000 2000-2005 2005-2010

To

tal F

ert

ilit

y

Year

Trends in Total Fertility in Selected Places in the Developed World

United StatesFranceAustraliaSwedenUnited KingdomCanadaItalyGermanyJapanSingaporeHong Kong

Source: World Population Prospects: The 2012 Revision, the United Nations (2012)

0

Organic Growth (Cont’d)

18

Encourage women to

stay at home and

have babies (i.e.

increase fertility rate)

Encourage women to

go to work (i.e.

increase labour force

participation rate)

Money and advanced planning for large-scale and high quality childcare services?

Organic Growth (Cont’d)

Cost of raising a child

UK – approx HK$2 Mn (0 -18 years)

Singapore – approx HK$3 Mn (0 - end of first degree)

Hong Kong middle class – approx HK$5 Mn (0 - end of first

degree)

Direct interventions proven NOT effective

An example is to provide incentives for educated couples to

have larger families

19Sources:

The Cost of a Child 2013, Child Poverty Action Group, UK (2013)

The $900,000 Singapore child, The Straits Times, 15 February 2013

Organic Growth (Cont’d)

20

1.621.62

1.96 (Year of Dragon in 1988)

1.60

(Year of Dragon in 2000)1.26

1.29(Year of Dragon in 2012)

0

0.5

1

1.5

2

2.5

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Ra

te

Year

2004:

5-day work

week and

childcare

leave

introduced

Total Fertility Rate in Singapore (1980 - 2012)

1984:

Policies

introduced to

raise birth rates

among target

groups such as

giving priority in

primary school

registration to the

kids of graduate

mothers

1987:

“Have Three or

More if You Can

Afford It”

campaign started

2000:

Baby Bonus

scheme

started

2012:

Government

launched

public

consultation

drive for a

sustainable

population

strategy

Source: Singapore’s population journey, The Straits Times, 6 October 2012

Organic Growth (Cont’d)

21

Our education system needs to be flexible enough

To adapt to labour needs

To produce individuals who are mentally ready to be flexible

and adaptable

No more single career tracks

Expect multiple careers or trades within a lifetime

GPRD Integration

Plan well beyond our boundary

Outsource more elderly care and healthcare services to north of the

boundary

Provide more initiatives such as

Portable welfare benefits and subsidy, healthcare vouchers, old age

allowance, old age living allowance

People will move north naturally

When they see no difference in services provided there

22

Planning for the Elderly

Elderly poverty will be a big problem and burden

One in three of our elderly now living below the poverty line

Retain the current and future senior citizens in the workforce

Despite better educated, their labour force participation rate (LFPR) is relatively

low

Provide incentives (e.g. tax reduction or exemption) to encourage working

23

Planning for the Elderly (Cont’d)

24

0.0%

5.0%

10.0%

15.0%

20.0%

7.1%

12.0% 12.5%

19.9% 19.9%18.5%

Rate

Place

LFPRs for Persons Aged 65 and above 2012

0%

20%

40%

60%

80%

100%

65-69 70-74 75-79 80-84 85+

14% 22%36%

48%57%

39%

39%

39%

35%29%36%

27%

18%13% 11%

11% 12% 7% 4% 3%

Pro

po

rtio

n

Age Group

Older Persons by Age Group and

Educational Attainment 2011

Secondary /

sixth form

Primary

No

schooling/

pre-primary

Post-

secondary

Source: 2011 Population Census, C&SDSource: Labour Force Statistics by Age, OECD (2014)

Financial Planning

There is no such thing as a free population policy, but

how can we finance it?

It will cost the Government a lot of money

Now is the time to plan for it – make a 15-year

financial plan

25

What We Shouldn’t Do?

Have a knee-jerk reaction to tackle short-term

problems

Only provide direct financial incentives to encourage

fertility

Cap the population

Plan only within the boundary of Hong Kong

26

Useful Indicators to Consider

Government expenditure to revenue ratio

Immigrants from non-Mainland and non-OECD

territories

Healthcare manpower to population ratio

Number of elderly care home places

Housing targets for a longer term

27

But Most Importantly…

Demographic challenges call for concerted efforts

Population study goes beyond numbers

We cannot plan for the future if we do not have a

vision

There needs to be an economic and social vision

of Hong Kong many decades from now

28

Bauhinia Foundation Research Centre

Q&A

29