Hong Kong's jobless rate climbed to a record last month as the SARS epidemic led to a slump in consumer spending and tourism, prompting stores, hotels and restaurants to fire workers.
The jobless rate rose to 8.3 percent from 7.8 percent in April, the government said in a statement. That's the highest since the government started compiling the data in August 1981.
"Small business might have stepped up staff layoffs, instead of forcing employees to take unpaid leave," said Daniel Chan, an economist with DBS Bank (HK) Ltd.
Rising unemployment may erode consumer confidence, making residents less inclined to spend in a city where retail sales dropped to a decade-low last year. Consumption accounts for about half of Hong Kong's economy, which contracted for the first time in almost two years during the January-to-March period.
The jobless rate, the second-highest in Asia after the Philippines, has more than tripled in the past five years as manufacturers such as Johnson Electric Holdings Ltd moved production to China to reduce costs. The SARS outbreak of has triggered another round of job cuts as consumers stay home to avoid catching the disease.
Hong Kong will lose 27,000 travel and tourism jobs, about two in five of the industry's workforce, because of SARS, according to the World Travel and Tourism Coun-cil. The city's tourist arrivals slumped 65 percent in April and may have slid further last month, the government said.
Even companies less affected by SARS are firing people. Hong Kong Exchanges & Clearing Ltd, which runs the stock and futures markets, said it sacked 14 employees last month to cut costs.
Reach Ltd, an undersea cable venture owned by Telstra Corp and PCCW Ltd, said it will cut a quarter of its workforce, or 250 workers, by the end of this year.
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