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The following is the speech by the Chief Executive at the Annual Fellowship Dinner of the 40th Anniversary of the Hong Kong Management Association today (November 22):
Human Capital for a World City
The Honourable David Li, Distinguished Guests, Ladies and Gentlemen,
Thank you for giving me this opportunity to celebrate with you the 40th Anniversary of the Hong Kong Management Association. I am particularly delighted to be here tonight for this important occasion. I was the Chairman of HKMA from 1979-1983, and therefore you can understand the Association has a special place in my heart.
Tonight, I would like to share with you my thoughts on a subject which is very close to my heart, a subject which is my first priority ever since I assumed responsibility as the Chief Executive, and that is, the development of our human capital. Before I begin, I know that also present here tonight are some 130 graduates who have just completed their course and will be receiving their Diploma in Management Studies in a special graduation ceremony later this evening. My warmest congratulations to you all.
People are Hong Kong's only natural resources and our most valuable asset. The diligence and resilience of Hong Kong people have helped us overcome many challenges in the past. It was with the resolve and support of the community that we have been able to overcome the Asian financial turmoil.
Indeed, our economy has resumed steady and stable growth. In the year 2000, we have had two quarters of double digit GDP growth. Growth for the third quarter, which will be announced later this week, looks very very encouraging indeed. For the year as a whole, GDP growth will be significant, significantly higher.
Our economic success in the past owes much to the enterprising spirit of our parents and grandparents. It is now up to us to ensure Hong Kong's continued success. If we are to take full advantage of the economic prospects offered by globalisation, emergence of the knowledge economy, and Mainland's continued economic expansion, it is essential that we improve and upgrade Hong Kong's human capital and in so doing create wealth and enhance the quality of life for all our citizens.
Looking into the future, the 21st Century promises to be an era of great opportunity, but at the same time, increasing volatility. As vast changes take place at an astonishing pace driven by innovation and technology, the problems we face are becoming more global, more complex and more interactive. They challenge communities and economies to become more vigilant, more responsive, more flexible and more versatile in order to stay on top of change and remain competitive. The same challenge faces the individuals who must move forward with the times, if they are not to be left behind.
At the recent APEC Leaders' Meeting in Brunei which I attended, every member economy talked about education and the importance of human capital development for one's competitiveness in the 21st Century. It is widely acknowledged that in a knowledge economy, future success will hinge on "brainpower". Every economy is undergoing education reform to upgrade the quality of its human capital, and there is keen competition for talents across nations in an increasingly borderless world.
Hong Kong: Asia's World City
For Hong Kong to stay ahead in the race, we must develop a clear vision of where we are heading, and what our human capital needs are. Earlier this year, the Commission on Strategic Development has mapped out Hong Kong's long-term development needs and goals. The vision is to develop Hong Kong into Asia's world city and a major city in China. Building on existing strengths, we see good prospects of Hong Kong maintaining a stronghold as an international financial and business services center, remaining as the city of choice for the regional headquarters of multinationals and becoming the transportation hub and centre for tourism for this part of the world. The onset of the digital age presents new business opportunities in information services and telecommunications. Additionally, Hong Kong will benefit further from China's accession to the WTO.
To capitalize on these opportunities, we must ensure that people of Hong Kong are fully equipped to rise to the challenge. We need a workforce who have a strong sense of purpose; who are knowledgeable and competent in the work they do; capable of independent and critical thinking; sensitive and responsive to change; positive and resilient in the face of setbacks; and creative in problem-solving. These qualities do not come as natural endowment; they need to be cultivated through education, training and development. It is a long process, but if we do not begin now, we will never see to the end.
The Manpower Projection to 2005
Today, we have a workforce of about 3.3 million people, of whom about 37% have an educational attainment of lower secondary or below, whereas only 27% of the workforce have post-secondary or above education. Out of 170,000 unemployed persons, about 50% have lower secondary and below education. Increasingly, workers with low skills and low education will encounter greater difficulty in getting employed in a knowledge economy.
A recent manpower projection study for the period from now to 2005 shows that, with continual economic growth and in tandem with Hong Kong's transformation into a knowledge economy, Hong Kong will require more people with higher education. The economic sector which will experience the fastest growth is financing, insurance and business services, at an annual average of 5.6%. This is underpinned in part by the trend towards e-commerce and information technology applications. Next in growth potential is the transport, storage and communication sector, at an annual average rate of 3.8%. This arises from the rapid development of telecommunications services and a steady growth in transport and logistics services as Hong Kong expands into a regional transportation hub.
In terms of education level, the projected demand for workers - workforce with post-secondary and university education is expected to grow much faster than the demand for workforce at lower educational levels. If the provision of post-secondary and above education remains at the present level, come 2005, demand will vastly outstrip supply by some 117,000 people. On the other hand, we expect a surplus of workers at lower secondary education level by about the same magnitude.
In other words, over the next five years total manpower demand and supply will roughly balance out, but there will be a mismatch of job requirements with the educational attainment of workforce. If we do nothing about the mismatch, the problem of unemployment for people with low skill and low education will deteriorate, leading to a further downward wage spiral. Whereas, the unsatisfied demand for knowledge workers with high levels of education will increase, bidding up salaries and undermining Hong Kong's competitiveness. The result is widening income disparities. Imagine if nothing is done today, what will be the long term consequences for Hong Kong.
The problem of manpower mismatch is a universal trend, although the magnitude of the problem may vary from place to place. The factors at work in Hong Kong include globalisation, knowledge economy, rapidly improving human resources in the cities in the Mainland, high population growth in Hong Kong, and inadequacies in our education system. For this evening, I will specifically talk about how we should face these challenges by improving Hong Kong's education and human resources development.
Skill Upgrading
To tackle manpower mismatch, one of the long-term solutions must lie with education; we must provide better education for all our youngsters so that they are better equipped to cope with the challenges and realise their aspirations. In the short term, we must seek to upgrade the skills of those workers who are being displaced as industries and companies migrate to the New Economy. Let me deal with the short-term solution of skill upgrading first.
Here we are faced with two challenges: skill shortage on the one hand and the surplus of unskilled workers on the other. Firstly, across the world, there is a serious shortage of talents in the burgeoning fields of information and technology, telecommunications, and financial services. To cope with rapid rise in short term demand, more and more countries have liberalized their immigration policies as part of aggressive programmes to attract talents. Notable examples are the United States and Singapore. Hong Kong will lose out in a significant way, if we are slow to respond and join in the competition.
The Government's manpower policy has always been, and will continue to be, to give priority of employment to local people. However, where there are shortages, we must fill the vacuum by relaxing our immigration policy to facilitate the importation of talents and workforce with special skills, albeit as a stop-gap measure, before we are able to train up our own people to meet the demands. If we cannot make up the shortfall of manpower particularly at the senior levels, many of the potential job opportunities at the lower levels will not be realised. Indeed, we may even lose some of the businesses to other cities.
Secondly, at the other end of the scale, economic growth, increased activities in tourism, and further provision of social welfare services will increase job opportunities at the lower level. However, these alone will not be enough. There is urgency in upgrading the skills and education level of our 1.2 million local workers with education level at lower secondary and below. Some of these workers may face the risk of being squeezed out of the job market if they do not improve their job skills. There are plenty of training and learning opportunities, and it is incumbent upon the individuals to step forward and take advantage of them. Learning is a personal endeavour that cannot be delegated.
I have announced in my Policy Address in October that we have earmarked $400 million for a wide variety of training programmes in the next two years for both employed and unemployed workers with low education levels. We will also be providing the Employees Retraining Board with a stable source of funding through an annual recurrent subvention, to draw up and implement plans for long-term development. We will also be reviewing the roles of various training institutions to ensure there is synergy, greater efficiency, more effective co-ordination in providing training and retraining, better meeting the needs of the market and employers.
Upgrading of the skill of the labour force is the joint responsibility of Government and employers. I wish to take this opportunity to appeal to employers in Hong Kong to make time available for their staff to undergo continuing development. According to a recent survey, only 8% of our companies have provided formal training for their employees. This compares most unfavourably with other developed economies, such as the United States - 93%, the United Kingdom - 83% and Australia - 68%. It is a cause for concern as lifelong learning is the only way to survive and succeed in the knowledge economy.
Education Reform
We cannot rely on importation of talents and skill to sustain our economic growth and maintain social progress. To achieve this, we must be able to provide a sustainable source of human capital ourselves and this can only be done through improving our education.
In my recent Policy Address, I pledged to roll out a comprehensive reform of the education system, covering the whole spectrum from early childhood to tertiary education. Indeed, education determines the quality of our young people who in turn holds the key to the future of Hong Kong. Our aim is to build a more flexible education system which provides choice to meet the diverse learning needs of students so that everyone can develop his or her potential to the fullest extent. Our priority in school education is to improve teaching methods, make learning more interesting, promote creativity of students, improve the physical environment of schools, and enhance the professionalism of teachers.
At the post secondary level, we have set ourselves the target of increasing the relevant age participation rate from the present 30% to 60% in ten years. This is a bold target, but a target we must achieve. Many of our neighbouring economies have already attained this target. We cannot afford to be lagging behind for too long.
The proposed expansion will focus on diploma and sub-degree programmes, rather than university degrees. The programmes will operate with government support, in the form of land at nominal premium and start-up loans for the training institutions, and a range of financial assistance for needy students. We believe giving students the choice will bring market forces to bear and ensure that the programmes provided are demand driven and responsive to changing needs.
We have very good universities. A quality assurance mechanism will be established to safeguard the quality of the other post-secondary education institutions. Before this has been fully worked out, only self-accrediting institutions with proven track record will be authorized to run such programmes.
I welcome private sector participation in the development of post-secondary education in Hong Kong, and we shall also explore the possibility of collaboration with overseas institutions. A multifarious approach is more suited to the dynamic situation in Hong Kong and more conducive to nurturing the multiple intelligence of our young people.
We have a very ambitions plan to expand our post-secondary education. But this cannot succeed without a corresponding increase in the quality of our primary and secondary education. We must make it a shared vision of our community and a collective responsibility of Government, parents and the teaching profession to improve our education system. The Government will set policy and ensure that sufficient resources are provided to implement the reforms. Parents must show care, provide guidance and share the joy of learning with their children. Educators must continue to upgrade their professional skills and standards to ensure that they are able to meet the rapid changes and challenges of the new age.
Every one of us must acquire the habit of lifelong learning. We must keep up with the change of time, and through continued education, upgrade our skills, add value, maintain and enhance our competitiveness and that of Hong Kong.
In a knowledge economy, brainpower or innovative human capital is worth more than physical and financial capital. Education, more education, together with a will to succeed and entrepreneurial spirit, will give members of our community the upward mobility that will not only create wealth and a better life for themselves but also bring prosperity and success to our entire society. Throughout Hong Kong history, we have always had a strong will to succeed; we have always had entrepreneurial spirit. Through investment in education, we will ensure Hong Kong's continued success.
Education is the most important investment in Hong Kong's future. I call on the community to share this responsibility and work with the Government to nurture a new generation of Hong Kong citizens.
Conclusion
To conclude, I cannot over-emphasise human capital development being the single most important strategy to underpin Hong Kong's continued development. This is a task that requires the concerted effort of the entire community. The Government has taken the lead by setting out a clear vision. We look to the community, and leaders in the education fields to respond by seizing the opportunities offered.
The vision of Hong Kong being Asia's world city hinges on our success in upgrading our human capital. I look to you, David, and to members of the Hong Kong Management Association for partnership in turning this vision into reality. With the wealth of experience and expertise accumulated over the past forty years, I am confident that the Hong Kong Management Association will scale new heights as you approach your Golden Jubilee in another decade.
Thank you very much.
Photo : The Chief Executive, Mr Tung Chee Hwa, attended the Hong Kong Management Association Annual Fellowship Dinner at the Hong Kong Exhibition and Convention Centre. During the occasion, fellowships and charter memberships were presented to individuals and corporate members with distinguished achievements in the management field. The Management Development Credit Unit (MDCU) Awards were also presented to companies which have sponsored the largest number of training hours and staff members. Picture shows Mr Tung presenting a plaque to a MDCU Awardee.
End/Wednesday, November 22, 2000
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