Hong Kong's International Financial Centre: Retrospect and Prospect

4. The Productivity of Hong Kong’s Labour Force
Behind aggregate sectoral measures lies the fundamental reality of a workforce still
adapting to the decline of manufacturing and the rise of a modern service economy. Before
anything else, Hong Kong’s economy is comprised of its people. Land, location, climate, and
natural resources—none matter and none count in the absence of a working, consuming,
investing population. What has actually driven the growth of Hong Kong’s economy during
recent decades? The answer is clear. Hong Kong’s contemporary economy has been shaped
mainly by rapid growth in the productivity of its labour force, growth mainly occurring in
financial and trade-related activities. 16
In recent years, the pace of growth in labour productivity in Hong Kong of about 5% per
annum from 2002 to 2007 far exceeded that of Japan (1.8%), Singapore (2.9%), Taiwan (3.1%),
Korea (3.3%), the Philippines (3.5%), Indonesia (3.6%), Thailand (3.7%), Malaysia (3.9%). No
advanced industrial country comes close, but one country far exceeds it. China recorded an
increase of 10.1% per annum for the same period. 17
The performance of China and Hong Kong
are obviously related, and both were also negatively affected by the global business downturn
associated with the financial crisis of 2008, but their joint productivity growth may be expected
to resume as a global recovery takes hold.
More revealing than the aggregate productivity indicator for Hong Kong is the breakdown
by sector, for here we see much divergence over time and a shifting sense of the future. Driving
annual changes are two components: the efficiency of labour deployed and technological
progress. These key investments were made over time to upgrade the quality of the labour force,
but deeper analysis suggests that the basic forces necessitating change came from service exports
and the growth of complementary service sectors on the Mainland.
16 Frank Leung, Gaofeng Han, and Kevin Chow, “Financial Services Sector as a Driver of Productivity Growth in
Hong Kong,” Working Paper 14/2009, Hong Kong Monetary Authority, 26 August 2009.
17 Ibid., p. 4.
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