Hong Kong's Next Crisis: Unemployment

A mask-wearing father carrying his child in a pretty empty MTR train

As of today there are just over 2,000 deaths from the coronavirus, over 75,200 confirmed cases. Hong Kong recorded its second death today, a 70-year-old who visited the mainland for a day and then came back with symptoms later. He also had existing health conditions.

A big concern now is the economic fallout from the Wuhan coronavirus -- and it's going to be huge just in Hong Kong alone.

Hong Kong Airlines cutting costs and staff to stay alive

Cathay Pacific has had to cut back its capacity by 40 percent, meaning lots of flight crews, engineers and catering don't have much to do and have been asked to take unpaid leave. They even closed their first class and business lounges in the airport since hardly anyone is flying these days.

Today Hong Kong Airlines laid off 170 staff, which a reporter pointed out, was more than the number of passengers who flew on the airline today.

And in order to survive this crisis, Hong Kong Airlines has stopped all in-flight entertainment, meals, drinks and even blankets to cut costs.

The remaining staff (around 3,300), are taking no-pay leave from mid-February until the end of June, which is the equivalent of working part-time on half their salary for the next two months.

Cathay Pacific has had to cut flights, staff take unpaid leave

An ex-colleague contacted me last night asking if I knew of any freelance work available. The company he works for has notified staff that they will have to take no-pay leave for four months starting next week. For younger workers who don't have much saved up, or those with debt or other obligations, that's a big financial hit.

Meanwhile hotels are operating on a dire existence. The Federation of Hong Kong Hotel Owners, which has 86 owners running 200 hotels that employ 80,000 workers said today that occupancy percentage levels are in the single digits.

"So few rooms are taken up that our members no longer gauge occupancy by percentage, but by room numbers, said Michael Li Hon-shing, executive director of the federation.

"Now, many full-time hotel staff are taking no-pay leave. I would not be surprised to see businesses closing down next. February and March will be the critical period for their life and death."

Hotel occupancy is in the single digits all over town

Tourism contributed 4.5 percent to Hong Kong's GDP in 2018. Surely this year it's going to be down in the dumps, as there are only some 3,000 people arriving in the city daily, compared to 100,000 last month, and 200,000 in February last year.

Yesterday the Hong Kong Tourism Board said COVID-19 is worse than SARS 17 years ago, when there was an average of 10,000 visitors daily and hotel occupancy was in the double digits.

This time a lot of airline carriers have suspended flights to Hong Kong, and even immigration at Shun Tak ferry terminal, Lo Wu and Lok Ma Chau have stopped, resulting in drastically fewer visitors coming in.

That means less travelers injecting money into the local economy, in particular retail, and on top of that locals are too scared to dine out, resulting in restaurants and bars being very quiet. Even taxis are easy to flag down these days.

Shopping malls are pretty empty, retail taking a big hit

The only places that are busy are supermarkets and pharmacies to get essentials like masks, rice and toilet paper.

That said, today I noticed more people going to work, or going out in general on the MTR and the bus. They are tired of being cooped up in their flats and want a change of scenery. Or maybe their bosses have had enough of the work-at-home measure that has resulted in terrible productivity levels (what have you been watching on Netflix?).

While the government has suggested civil service staff work from home until February 23, we will find out soon if it will extend it for another week or ask more staff to come back to the office.

However, we are no where near containing the coronavirus to the point where the numbers are plateauing yet. It is considered highly contagious as demonstrated from the statistics and the links between some of the cases.

There may be a lot more restaurant closings in Hong Kong

Regardless, in the end, the economic cost of this virus will hurt a lot of people in Hong Kong, from layoffs to pay cuts. Will the city be able to rebuild itself again after this? It will take sheer determination, creativity and resourcefulness. As demonstrated the government has no leadership in this crisis. We're going to have to do this on our own.

香港人加油!!!!