The Impact of Changing Employment System and Human Resource Practices to Labour Market Mismatch: A Case of the Hong Kong Banking Sector

Labour market mismatch and structural unemployment has recently become a hot topic attracting much discussion in many advanced industrialised economies. These economies are marked by a relatively high rate of unemployment but yet at the same time faced with a high level of vacancies in many economic sectors, suggesting the possible existence of labour market mismatch along the skill, qualification, and geographical lines. Hong Kong is an interesting case to examine the labour market mismatch issue. Despite the fact that Hong Kong had a relatively low rate of unemployment (3.3% as of December 2014) and was ranked No. 1 (out of 148 global economies) in labour market efficiency according to World bank’s 2013 Global Competitive Index, many of its economic sectors have had difficulties in finding the right types of labour possessing appropriate qualifications and skills to fill the vacancies emerged. This research study focuses on examining Hong Kong’s banking sector because, first, this sector is the largest contributor in terms of employment and GDP within the financial services industry which is currently facing a serious problem of talent gap calling for immediate attention. Second, it is expected that useful implications for advanced industrialised economies could be drawn from the results in examining labour market mismatch in the banking sector of Hong Kong.

This research sets out to examine why labour market mismatch exists in Hong Kong’s banking sector despite the recent implementation of important labour market policies in the economy. It is argued that in studying labour market mismatch, one should go beyond examining labour market changes at the societal level to capture the structural changes as found in the employment system characterising jobs in the sector examined and the associated changes in the human resource management practices implemented in that sector at the organisational level. Some policy implications to address the issue of labour market mismatch will be drawn from the study. This research is based on information collected from primary sources of data collected from interviews conducted between July 2005 and March 2006 and again between September 2012 to November 2014 with both line and human resource managers employed by a sample of Hong Kong-based banks and secondary sources of data including relevant government publications, banks’ annual reports and newspaper reports.       

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