Staff hiring and retention became a headache across the developed and developing world following COVID-19, but a survey of firms in the Guangdong-Hong Kong-Macao Greater Bay Area showed the labour market loosened markedly late last year.
The Standard Chartered GBA Business Confidence Index (GBAI) survey, conducted by the Standard Chartered and the Hong Kong Trade Development Council (HKTDC), for the fourth quarter of last year captured labour-market conditions and company hiring plans for this year.
A collective 53.2% of the respondents described labour supply conditions for their industry as “somewhat loose” and “very loose”, significantly higher than the 11.4% who reported “somewhat/very tight” conditions.
Of the respondents, 14.1% said they would increase hiring in the first quarter of this year, while the number rises to 15.8% for the entire year and 71.2% of respondents expressed willingness to hire more youngsters or fresh graduates to support youth employment.
The broad GBAI current performance index for business activity eased to 51.4 in fourth quarter of 2023 from 52.9 in the third quarter. The GBAI expectations index slipped to 54.1 from 56.3 in the third quarter, reflecting a more cautious sentiment in the region compared with the third quarter but was still consistent with a modest recovery story going into this year.
Regarding cities’ performance, Hong Kong rose to 50 from 49 for its current performance sub-index but its expectation sub-index fell to 49 from 52.6.
The Manufacturing and Trading and Professional Services was the worst-performing element, while other industry components, including Retail and Wholesale, stayed largely steady.
Shenzhen experienced the most decline among all GBA cities in terms of the current performance sub-index, falling to 49.5 from 54.8 – the only city below 50.
In terms of industry, current performance indices for business activity in Retail and Wholesale and Innovation and Technology showed the biggest quarter-to-quarter drops in the fourth quarter among the five industry categories. Their scores could merely be normalising from a high base, as they were strong outperformers in the third quarter.
In terms of ranking, Innovation and Technology managed to cling on to the top spot, despite this steep quarter-to-quarter drop, while Retail and Wholesale fell to the last place from its previous second-place position in the third quarter.
Kelvin Lau, Senior Economist, Greater China, Standard Chartered, said: “With both the current performance and expectations sub-indices of GBAI still staying above 50, we remain confident that the region is entering 2024 with modest recovery momentum. We are particularly encouraged by the strong ‘production/sales’ and ‘profits’ performance and a rebounding tech industry.
Irina Fan, Director of Research, HKTDC, said many GBA businesses sought to boost staff retention levels and increase automation to ensure recovery momentum was maintained in the face of long-term labour market challenges.
Outlining the strategies being adopted, she said: “Cross-border recruitment is also very much on the agenda, along with the appointment of recent graduates and other younger staff members. All of this is essential, given that the outlook for 2024 is increasingly positive.”
As the first forward-looking quarterly survey in the market, GBAI enables businesses to better understand the current business climate, gauge future performance prospects and formulate their market strategies for the GBA.
It is compiled based on a survey of more than 1,000 GBA companies covering the manufacturing and trading, retail and wholesale, financial services, professional services, and innovation and technology sectors.
