2001-based Manpower Projection for Trading and Logistics up to 2007

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2001-based Manpower Projection for Trading and Logistics up to 2007

Government of the Hong Kong Special Administrative Region June 2003

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2001-based Manpower Projection for Trading and Logistics up to 2007

Economic Analysis Division, Financial Services and the Treasury Bureau in collaboration with

Education and Manpower Bureau and Census and Statistics Department

Government of the Hong Kong Special Administrative Region June 2003

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Manpower projection for trading and logistics up to 2007

Introduction

This is a supplement to the main report on “Manpower Projection to 2007”, providing more detailed information on projection of manpower requirement in the trading and logistics sector up to 2007. To facilitate comparability and cross-referencing, it adopts a broadly similar format as that of the main report, comprising an overview of the major features and development trends in the trading and logistics sector, quantitative projection of manpower requirement, and a summary of survey feedback from the employers and employees concerned.

Major features of the trading and logistics sector

2. The trading and logistics sector is composed of five major sub-sectors, viz. the import/export trade, the wholesale trade, freight transport, storage and miscellaneous communications services. Each of these sub-sectors is characterised by a predominance of small and medium-sized establishments (SMEs) with less than 50 persons engaged. In 2001, SMEs taken together accounted for over two-thirds of total business receipts in the trading and logistics sector. The respective share in sectoral employment was 79%, considerably higher than that of 59% for the entire economy. Thus the average employment size for trading and logistics establishments, at five persons in 2001, is smaller than that for all business establishments in the economy, at eight persons. Capital investment involved in this line of business is usually not very large, and there is virtually no restriction on market entry. As a result, competition amongst business operators has been very keen.

3. Within the trading and logistics sector, the import/export trade is the core part which links up the various sub-sectors. In face of intensifying competition in the market, many import/export firms have been striving to raise the value-added content of their business over the years. New services have been introduced including, for instance, design and making of samples, and back-up services for identifying and arranging suitable production activities. Some of the operators even go as far as providing credit financing to manufacturers, giving advice and guidance on production processes, and engaging in inspection and quality control of products. They have thus moved upstream and become more

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involved in the production of goods to meet the specific needs of customers, rather than just sourcing available finished products to fit the specifications of their clients as in the past. They have also sought to strengthen further their channelling system downstream, for raising efficiency, reliability and response time. These are all to gear in with the latest trends for supply-chain and e-commerce in the international trade arena.

Development trends

4. The trading and logistics sector has grown from strength to strength over the years. Between 1986 and 2001, net output or value-added in the sector went up strongly, by an average of 13% per annum in money terms. This notwithstanding, there appeared to be some moderation in the growth pace more recently, upon the impact of the Asian financial crisis. Also partly contributed was a further shift in the composition of trade from re-exports to offshore trade, as more and more of the goods manufactured across the boundary were shipped out from ports in the Mainland of China (the Mainland) direct. As a consequence, the value-added contribution of the trading and logistics sector, having surged from 17% of GDP in 1986 to 24% in 1996, showed only a small increase to 26% in 2001 (Annex 1).

5. Measured by employment, the trading and logistics sector rose by an average of 3% per annum over 1991-2001. Employment gain took place entirely in the first half of the period, more than offsetting the decrease in the latter half.

In 2001, a total of 795 300 persons were engaged in the trading and logistics sector, accounting for 26% of the entire local workforce (Annex 2).

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1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 0

50 100 150 200 250 300

350 Value-added ($Bn)

0 200 400 600 800 Employment ('000) 1000

Chart 1: Value-added and employment in trading and logistics

Employment

Value-added

6. Analysed by constituent sector, miscellaneous communications services, the import/export trade and freight transport were the ones having the fastest growth in value-added, by an average of 15%, 13% and 13% per annum in money terms respectively over 1986-2001. As to the wholesale trade and storage, the corresponding growth rates were less rapid, at 8% and 5%. Ranked by size of value-added contribution, the import/export trade was the largest sub-sector, with a share of 78% in 2001. This was followed by freight transport (16%), the wholesale trade (5%), miscellaneous communications services (2%), and storage (less than 1%).

7. A broadly similar pattern was observed for the respective employment figures. Comparing 2001 with 1991, miscellaneous communications services likewise had the largest increase, averaging at 10% per annum, followed by the import/export trade and freight transport, with corresponding growth rates of 4%

and 3%. These were faster than the 1% rise for storage and virtually zero growth for the wholesale trade. Ranked by employment size, the import/export trade again had the largest share at 65% in 2001, much exceeding those of freight transport (22%), the wholesale trade (9%), miscellaneous communications services (3%), and storage (1%).

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Value-added in 2001:

Logistics (17.9%)

Employment in 2001:

Total value-added in trading and logistics : $314.8 bn in 2001

Total employment in trading and logistics : 795 300 in 2001

Chart 2: Value-added and employment in trading and logistics by constituent sector

Trading- Import/export trade (77.5%)

Logistics (25.6%) Trading-

Wholesale trade (4.6%)

Trading- Wholesale trade (9.1%)

Trading- Import/export trade (65.2%)

8. Over the years, Hong Kong’s export trade has been undergoing a progressive structural transformation, as indicated below :

¾ The economic reform and open-door policy implemented in the Mainland since the late 1970s has created enormous business opportunities for Hong Kong’s manufacturing and trading firms.

Attracted by the abundant labour and land resources at low cost in the Mainland, Hong Kong manufacturers have relocated most of their labour-intensive production processes across the boundary. Yet many of the output produced, as well as the input materials required, are still shipped through Hong Kong. This has led to a rapid expansion in merchandise trade, including in particular re-export trade, between Hong Kong and the Mainland. Consequently, the proportion of re-exports in total exports of goods soared, from 48% in 1987 to 92% in 2002 (Annex 3).

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Chart 3 : Total exports of goods

1987 2002

Domestic exports

$195.3 bn (51.6%)

Domestic exports

$130.9 bn (8.4%)

Re-exports

$182.8 bn (48.4%)

Re-exports

$1,429.6 bn (91.6%)

¾ But the composition of trade has shifted further towards offshore trade more recently. This is induced in part by the much streamlined customs procedures and enhanced port facilities in the Mainland.

Thus more and more of the goods produced in the Mainland are shipped out direct from the ports there, rather than indirectly through the Hong Kong port. In line with this, exports of trade-related services, comprising predominantly offshore trade⁽¹⁾, has increased at a much faster pace than total exports of goods, averaging at 13% per annum in real terms as against 4% per annum over 1997-2002.

Consequently, their share in total exports of services has jumped visibly, from 25% to 33% over the period.

(1) In the context of GDP, exports of services include, in addition to trade-related services, such other components as transportation services, travel services, financial services, insurance services, etc.

As to exports of trade-related services, not all of them involve production by Hong Kong manufacturers. Some may involve merchanting whereby the goods are bought and then re-sold for a profit, while some others involve merchandising whereby a commission is earned for arranging a specific trade deal.

Net proceeds generated from shipments pertaining to offshore trade are included as part of exports of services, rather than as part of exports of goods.

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¾ Analysed by major market, the Mainland has, since 1988, overtaken the United States to become the largest market for Hong Kong’s total exports of goods. In 2002, exports of goods to the Mainland accounted for 39% of the total, distinctly up from 23% in 1987. By contrast, the United States had a smaller share in 2002 than in 1987, at 21% as against 28%. Moreover, reflecting the growing importance of intra-regional trade, the Asia-Pacific region as a whole took up nearly 60% of Hong Kong’s total exports of goods in 2002 (Annex 4).

Chart 4 : Total exports of goods by major market

1987 2002

United States

$105 bn (27.8%)

Japan

$19 bn (5.1%)

Others

$88 bn (23.3%)

Taiwan

$12 bn (3.2%)

Mainland of China

$613 bn (39.3%)

United States

$333 bn (21.3%) European Union

$65 bn (17.3%)

European Union

$207 bn (13.2%)

Japan

$84 bn (5.4%)

Taiwan

$35 bn (2.2%) Others

$289 bn (18.5%) Mainland of China

$88 bn (23.3%)

¾ In the global context, Hong Kong continues to be the world’s busiest container port and busiest airport in terms of international freight. In 2002, it handled about 19 million Twenty-foot-equivalent units (TEU) of containers and 2.5 million tonnes of airborne cargo. Currently, there are about 70 airlines operating over 4 100 scheduled flights each week between Hong Kong and 130 destinations globally. Also, there are 370 container shipping services each week to over 500 destinations in 170 countries/territories worldwide.

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¾ Besides, Hong Kong is the world’s 10th largest trading entity in terms of merchandise trade, as well as the 13th largest in terms of services trade. Its position as a major trading hub in the region is backed by its favourable geographical location, first-class transport infrastructure and communications facilities, and efficient business support services.

China’s accession to the World Trade Organisation (WTO) can be expected to provide even more opportunities, yet also challenges, for Hong Kong’s external trade sector in the years to come.

Projected manpower requirement in the trading and logistics sector up to 2007

9. Projection of manpower requirement has been done for some selected economic sectors and domains up to 2007, based on statistical models fitted to the employment data and also expert views gathered from an earlier consultation exercise⁽²⁾. For the trading and logistics sector, manpower requirement is projected to increase from 795 300 in 2001 to 837 300 in 2007, or by an average of 0.9% per annum. Logistics will continue to provide the primary impetus to growth in manpower requirement in the entire sector over 2001-07, with a projected increase averaging at 2.4% per annum, much exceeding the increase envisaged for trading, averaging at 0.3% per annum. These compare to a projected growth rate of 1.0% per annum for overall manpower requirement in Hong Kong⁽³⁾ (Annex 5).

10. Analysed by sub-sector, the following are noteworthy :

¾ Manpower requirement in the import/export trade is projected to increase slightly, from 518 800 in 2001 to 529 200 in 2007, or by an average of 0.3% per annum. Although the volume of trade routed

(2) In the projection exercise, statistical models for 40 major economic sectors have been calibrated for projecting overall manpower requirement in Hong Kong, based on their respective employment data series from 1986 to 2001. The preliminary projection results thereby generated are then examined carefully and refined, taking into account the views of industry leaders, trade association representatives, academic experts, and relevant Government bureaux and departments as obtained from a consultation exercise conducted during June - September 2002.

For details, see “2001-based Manpower Requirement Projection by Economic Sector”, Census and Statistics Department.

(3) This includes all employed Hong Kong residents regardless of their place of work, and excludes foreign domestic helpers.

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through Hong Kong is likely to remain high, it is envisaged that more and more foreign trade companies will get into direct contact with their counterparts in the Mainland, upon China’s accession to WTO.

In addition, the improved transport infrastructure and business support services in the Mainland are likely to continue to generate a trade diversion effect in the coming years (Annex 6).

¾ Manpower requirement in the wholesale trade is projected to remain stable at around 72 500 in the period up to 2007. The impetus rendered by further expansion in overall external trade is expected to be offset by a possible decrease in relative importance of Hong Kong as a middleman in external trade involving the Mainland (Annex 7).

¾ Manpower requirement in logistics is projected to continue on an increase, from 204 000 in 2001 to 235 600 in 2007, or by an average of 2.4% per annum. This is attributable in part to a further expansion in sea and air freight transport services, in tandem with Hong Kong’s development as a maritime and air services hub in the region (Annex 8).

11. Analysed by occupation category, the following points are worthy of note :

¾ Within the trading sub-sector, the requirements for managers and administrators, professionals, associate professionals, and craft and related workers are projected to rise between 2001 and 2007, yet to be accompanied by declines envisaged for the other occupation categories. The increase is expected to be most pronounced amongst associate professionals, with the respective share surging from 28% in 2001 to 35% in 2007. But the share of clerks is projected to fall, from 39% to 31% over the same period, presumably due to office automation and e-commerce (Annex 9b).

¾ For the logistics sub-sector, manpower requirement is projected to increase extensively across almost all the major occupation categories, in particular amongst those at the upper segment. Reflecting this, the shares of managers and administrators and of associate professionals are expected to increase from 7% each in 2001 to 8%

and 10% respectively in 2007. Yet at the same time, the share of clerks is expected to decline, from 23% to 21% (Annex 9c).

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¾ These suggest a further increase in demand for higher-skill workers, plausibly at the expense of the lesser-skill ones, upon continued relocation of certain back office functions to the lower cost areas outside Hong Kong and also amidst increasing use of electronic means for business transactions.

12. Analysed by educational attainment, the following major observations are relevant :

¾ For the trading sub-sector, manpower requirement for persons with higher educational attainment, i.e. at sub-degree education and above, is expected to go up rapidly, with its share surging from 21% in 2001 to 35% in 2007. On the other hand, the corresponding share for persons with secondary education and below is envisaged to drop distinctly, from 65% to 50% (Annex 10b).

¾ As to the logistics sub-sector, manpower requirement for persons with sub-degree education and above is expected to remain on an uptrend, with its share rising from 7% to 11% over 2001-07, while the respective share for persons with secondary education and below is expected to shrink from 86% to 80% (Annex 10c).

13. Statistical models apart, two single-equation econometric models are also calibrated for projection purpose, with one for the trading sub-sector and the other for the logistics sub-sector (Annex 11). The projection results likewise indicate that the logistics sub-sector will have faster growth in manpower requirement than the trading sub-sector. This is notwithstanding the trend of increased application of advanced technology and the attainment of economies of scale in logistics operation. Employment in the trading and logistics sector in general is related to the level of Hong Kong’s external trading activity. Taking trading and logistics together, manpower requirement is projected to grow by an average of 1.3% per annum up to 2007, somewhat faster than the average annual growth of 0.9% as derived from the statistical model-based projection.

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Feedback from the establishment survey on business environment, manpower requirement and training needs in respect of trading and logistics

14. In the third quarter of 2002, the Census and Statistics Department conducted an establishment survey⁽⁴⁾on business aspirations and training needs, upon Hong Kong’s economic restructuring and China’s accession to WTO. The following feedback from trading and logistics establishments is noteworthy :

¾ On business prospects, 25% of the establishments surveyed were optimistic about the business outlook for the period up to 2007, with 2% holding a very optimistic view. On the other hand, 35% of the establishments were pessimistic about the medium-term outlook, with 5% being very pessimistic. Generally speaking, large establishments tended to be more sanguine about the business prospects over the next five years (Annex 12).

¾ On business turnover, 23% of the establishments surveyed predicted further increase over the next five years, with 2% even anticipating a significant increase. By contrast, 42% of the establishments expected a contraction in business turnover, with 13% projecting a significant decrease (Annex 13).

¾ On investment projects in the Mainland, 28% of the establishments surveyed indicated commitment in such projects (Annex 14).

¾ New business opportunities were cited by a considerable proportion (41%) of the establishments upon China’s accession to WTO, while 54% did not think so (Annex 15).

¾ On business environment in Hong Kong, China’s accession to WTO was deemed as a mixed blessing, bringing both opportunities and challenges to Hong Kong in the coming years. The more distinct

(4) The survey successfully enumerated some 4 200 establishment, to collect their views on manpower requirements and training needs in Hong Kong over the next five years, amidst further structural change in the economy, as induced by rapid advances in information technology and e-commerce, globalisation and liberalisation of trade and investment, China’s accession to WTO, and closer economic integration between Hong Kong and the Mainland. The response rate attained was 90%.

It is estimated from the survey that about 120 000 establishments were engaged in trading and logistics activities, employing some 723 700 persons, as at mid-2002.

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concerns expressed by the establishments were “face keener competition from enterprises in the Mainland”, “need to better understand the market and changes in investment environment in the Mainland” and “more companies to relocate business operations to the Mainland” (Annex 16).

¾ In order to cope with changes in business environment, over half of the establishments were inclined to resort to the following measures (Annex 17) :

• increase the use of IT within the company (57%);

• expand business in the Mainland (54%);

• focus on the core business and reduce the peripheral business with lower value-added content (53%);

• upgrade the skills of existing staff (53%); and

• upgrade the capability of the workforce on technology and language skills (52%).

15. As to future manpower requirements and training needs, the trading and logistics establishments surveyed were of the following views :

¾ Future manpower requirement was expected to shift more towards the higher end of educational attainment, with increases in shares at the postgraduate, first degree, sub-degree and matriculation levels between 2002 and 2007, yet with decreases in shares at the lower secondary and below and upper secondary levels (Annex 18).

¾ Analysed by occupation category, increases in shares were predicted for professionals and for service workers and shop sales workers between 2002 and 2007. On the other hand, decreases in shares were predicted for managers and administrators, for elementary occupations and for plant and machine operators and assemblers (Annex 19).

¾ On training plans and budget, the trading and logistics establishments surveyed had the following feedback :

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• Amongst those establishments with employees, 13% had training plans and 11% had training budget for their staff (Annex 20).

• Analysed by occupation category, managers and administrators, and associate professionals were preferred to have their management skills enhanced. As to professionals, the focus of training should preferably be geared to job-specific skills. Clerks and service workers and shop sales workers were preferred to have their language skills enhanced. For the remaining occupation categories, it was interpersonal and intrapersonal skills for the workplace that needed to be enhanced (Annex 21).

• As regards mode of training, self-learning was most preferred, followed by extra-mural courses and on-the-job training (Annex 22).

Feedback from the household survey on employment concerns and training needs in respect of persons engaged in the trading and logistics sector

16. In the third quarter of 2002, the Census and Statistics Department had separately conducted a thematic household survey on employment concerns and training needs of the local workforce⁽⁵⁾. From persons engaged in trading and logistics, the following feedback is relevant :

¾ On perceived prospects of the sector, 29% of the persons engaged in trading and logistics were optimistic about the medium-term prospect, anticipating either a moderate or fast growth over the next five years.

On the other hand, 36% predicted only a slow growth, 22% zero growth, and 14% even a contraction in business (Annex 23).

¾ On challenges/problems faced, “contraction of business” was the most commonly cited problem (by 40% of the persons engaged).

This was followed by “keen competition amongst companies within the sector” (34%), and “corporate downsizing” (31%) (Annex 24).

(5) The survey successfully enumerated some 8 000 households. Within each successfully enumerated household, all economically active persons were interviewed to collect information on their aspirations as well as their employment concerns and training needs over the medium term in face of structural change in the economy. The response rate of the survey was 72%.

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¾ When asked about whether they had been affected by the prevalence of corporate restructuring, 28% of the persons engaged replied in the affirmative. Amongst them, 41% indicated that they had experienced “salary/wage cuts”, 35% “increasing work pressure”, and 35% “longer working hours” (Annex 25).

¾ On possession of job-specific skills, 94% of the persons engaged claimed to have sufficient/very sufficient job-specific skills to cope with the current job requirements (Annex 26).

¾ On training needs, 6% of the persons engaged had attended job-related training/retraining courses arranged by their employers in the past 12 months, while 6% had attended job-related training/retraining courses on their own initiative (Annex 27).

¾ 13% of the persons engaged had plans to attend job-related training/retraining courses in the coming 12 months.

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Annex 1

Value-added of trading and logistics

Value-added at current market prices

Average annual rate

of change in value terms 1986 1996 2001 1986-96 1996-2001 1986-2001

($Bn) ($Bn) ($Bn) (%) (%) (%)

Trading and logistics 51.4 280.2 314.8 18.5 2.4 12.8

(17.3) (24.2) (25.9) Of which :

(a) Trading 42.0 231.0 258.5 18.6 2.3 12.9

- Import/export trade 37.7 214.8 244.1 19.0 2.6 13.3

- Wholesale trade 4.3 16.2 14.4 14.2 -2.4 8.4

(b) Logistics 9.4 49.2 56.3 18.0 2.7 12.7

- Freight transport 8.3 42.0 50.1 17.7 3.6 12.8

- Storage 0.5 1.6 1.2 11.4 -6.4 5.1

- Miscellaneous communications services

0.6 5.6 5.1 24.7 -1.9 15.1

c.f. Overall GDP at factor cost 297.7 1,159.0 1,216.2 14.6 1.0 9.8

Notes : ( ) Figures in brackets represent % shares in GDP.

Figures may not add up exactly to the total due to rounding.

Source : Census and Statistics Department.

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Annex 2

Employment in trading and logistics

Number of

persons engaged* Average annual growth rate

1991 1996 2001 1991-96 1996-2001 1991-2001

(%) (%) (%)

Trading and logistics 571 700⁺ 808 700⁺ 795 300 7.2 -0.3 3.4

(21.3) (27.6) (26.3) Of which :

(a) Trading 421 700 613 300 591 300 7.8 -0.7 3.4

- Import/export trade 350 000 532 300 518 800 8.7 -0.5 4.0

- Wholesale trade 71 700 81 000 72 500 2.5 -2.2 0.1

(b) Logistics 150 000⁺ 195 400⁺ 204 000 5.4 0.9 3.1

- Freight transport 136 800⁺ 173 300⁺ 177 300 4.8 0.5 2.6

- Storage 4 900 6 000 5 300 4.2 -2.5 0.8

8 300 16 100 21 400 14.1 5.8 9.9

c.f. Total employment in the economy (net of foreign domestic helpers)

2 682 700 2 925 200 3 029 400 1.7 0.7 1.2

Notes : (*) Figures for 1996 and 2001 are based on the “resident population” approach, while those for 1991 are based on the former “extended de facto population” approach.

(+) Imputed figure.

( ) Figures in brackets represent % shares in total employment in the economy.

Source : Composite Employment Estimates, Census and Statistics Department.

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Annex 3

Total exports of goods and services

Value at current market prices

Average annual rate of change in real terms 1987 1997 2002 1987-97 1997-2002 1987-2002

($Bn) ($Bn) ($Bn) (%) (%) (%)

Total exports of goods 378 1,456 1,561 13.0 4.0 9.9

Of which :

Domestic exports 195 211 131 -0.3 -6.0 -2.2

(51.6) (14.5) (8.4)

Re-exports 183 1,245 1,430 19.3 5.4 14.5

(48.4) (85.5) (91.6)

Total exports of services 90 291 357 5.8 7.3 6.3

Of which :

Transportation 32 87 103 6.2 4.4 5.6

(35.8) (30.0) (28.8)

Travel 26 78 78 4.0 4.5 4.2

(29.1) (26.8) (21.9)

Trade-related services 16 73 117 7.8 12.9 9.5

(17.6) (25.2) (32.8)

Other services 16 52 59 5.4 6.7 5.8

(17.5) (18.0) (16.5) Total exports of goods

and services

468 1,747 1,919 11.7 4.6 9.3

Notes : ( ) Figures in brackets represent % shares in the respective totals.

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Annex 4

Total exports of goods by major market

Value at current market prices

Average annual rate

of change in real terms Major export market 1987 1997 2002 1987-97 1997-2002 1987-2002

($Bn) ($Bn) ($Bn) (%) (%) (%)

Asia-Pacific region 172 801 910 14.5 5.8 11.5

(45.4) (55.0) (58.3) Of which :

Mainland of China 88 508 613 17.1 6.9 13.6

(23.3) (34.9) (39.3)

Japan 19 88 84 13.8 2.8 10.0

(5.1) (6.1) (5.4)

Taiwan 12 37 35 9.5 2.9 7.2

(3.2) (2.5) (2.2)

Singapore 10 38 32 12.0 -0.5 7.6

(2.7) (2.6) (2.0)

Others 42 130 147 10.0 5.8 8.5

(11.1) (8.9) (9.4)

United States 105 316 333 10.2 2.5 7.5

(27.8) (21.7) (21.3)

European Union 65 214 207 10.7 2.0 7.7

(9.5) (14.7) (13.2)

Rest of the world 36 125 111 11.5 -0.4 7.4

(17.3) (8.6) (7.1)

Total 378 1,456 1,561 12.5 4.0 9.6

Notes : ( ) Figures in brackets represent % shares in the respective totals.

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Annex 5

Projected manpower requirement for trading and logistics in 2007

Actual employment

in 2001

Projected manpower requirement

in 2007 Change in 2007 over 2001

Number Number Number % change

Average annual %

change

Trading and logistics 795 300 837 300 42 000 5.3 0.9

Of which :

(a) Trading 591 300 601 700 10 400 1.8 0.3

- Import/export trade 518 800 529 200 10 400 2.0 0.3

- Wholesale trade 72 500 72 500 0 0.0 0.0

(b) Logistics 204 000 235 600 31 600 15.5 2.4

- Freight transport 177 300 199 700 22 300 12.6 2.0

- Storage 5 300 5 900 700 12.6 2.0

21 400 30 000 8 600 40.3 5.8

c.f. Total employment in the economy (net of foreign domestic helpers)

3 029 400 3 222 700 193 300 6.4 1.0

Note : Figures may not add up exactly to the total due to rounding.

Source : 2001-based Manpower Requirement Projection by Economic Sector, Census and Statistics Department.

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Annex 6

Projection of manpower requirement for the import/export trade in 2007

Average annual growth rate

of employment (%) Model

Average annual growth rate during

2001-07 (%)

1986-2001 : 6.12 Partial sum logistic -0.07

1991-2001 : 3.23 Linear 5.72

1991-1996 : 7.45 Log parabola -7.65

1996-2001 : -0.81

0 200 000 400 000 600 000 800 000 1 000 000

86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

Year

Number of employed persons..

Actual Partial sum logistic Linear Log parabola

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Main points

z The growth in employment up to 1996 reflected the transition of manufacturing firms to import/export firms. The respective employment levelled off afterwards.

z Yet the initiatives being taken to promote trade between Hong Kong and the Mainland, including the closer Economic Partnership Arrangement (CEPA), should foster growth in the import/export trade sector and hence in its manpower requirement.

Projection after incorporating expert views and judgement

Model chosen

Base-year (2001) figure

Model-derived growth rate + Additive factor (% point of adjustment) =

Projected growth rate 2001-07

Projected (2007) figure Partial sum logistic 518 800 -0.07% + 0.4% = 0.33% 529 200

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Annex 7

Projection of manpower requirement for the wholesale trade in 2007

0 20 000 40 000 60 000 80 000 100 000

86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

Year

Number of employed persons

Actual Constant Log parabola

Reciprocal parabola

Average annual growth rate

of employment (%) Model

Average annual growth rate during

2001-07 (%)

1986-2001 : 1.62 Constant 0.00

1991-2001 : -0.46 Log parabola -6.22

1991-1996 : 1.23 Reciprocal parabola -5.59

1996-2001 : -2.13

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Main points

z Large retailers will reduce costs by sourcing products from manufacturers direct. The demand for intermediary service will thus decline.

z Yet wholesalers will still have competitive edge in terms of product knowledge, business network and bargaining power on price level.

z Balancing the positive and negative factors, the manpower requirement is expected to be broadly stable.

Projections after incorporating expert views and judgement

Model chosen

Base-year (2001) figure

Model-derived growth rate + Additive factor (% point of adjustment) =

Projected growth rate 2001-07

Projected (2007) figure

Constant 72 500 0.00% + 0.00% = 0.00% 72 500

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Annex 8

Projection of manpower requirement for the logistics sub-sector in 2007

Main points

z The future prospect of logistics in Hong Kong will depend very much on developments in the Mainland market. With improvement in port and airport facilities across the boundary, there are likely to be more and more direct shipments from the Mainland to overseas markets.

z Despite a projected increase in cargo handling, the resultant manpower requirement may not show a proportionate rise, as the cargo handling process is quite automated and the existing capacity has not yet been saturated.

z Employment in the logistics segment is expected to remain on an uptrend in the period up to 2007. The air cargo forwarding industry and the third party logistics services providers are likely to be the major growth areas in the coming years. The growth in air freight will plausibly be faster than land freight and water freight in the foreseeable future.

170 000 180 000 190 000 200 000 210 000 220 000 230 000 240 000 250 000

98 99 00 01 02 03 04 05 06 07

Year

Number of employed persons

Actual figure Projected figure

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Projection methodology

• With logistics employment spreading across a number of economic sectors, including freight transport relating to land, water, air, and services incidental to freight transport, manpower requirement in logistics cannot be projected using a single statistical model.

Rather, it is extracted from the model-based projections made to the relevant economic sectors, based on the shares of logistics related employment in those relevant economic sectors over the past years.

Proportions of the logistics segment to relevant economic sectors

Historical proportion (%)

Assumed proportion

(%)

Proportion of 1998 1999 2000 2001 2007

Land transport :

Land freight transport to “land transport”

53.5 52.6 52.6 52.6 52.9

Water transport :

Water freight transport to “water transport”

91.9 91.8 92.8 92.8 92.3

Water freight transport to “services incidental to transport”

33.2 35.0 34.8 37.7 33.3

Air transport :

Air freight transport to “air transport”

60.9 65.3 64.5 61.6 63.1

Air freight transport to “services incidental to transport”

17.2 20.9 22.0 20.9 22.1

Services incidental to transport : Other freight transport to “services

incidental to transport”

4.6 5.0 3.2 2.8 3.9

(27)

Projection for 2007 after incorporating expert views and judgement

Relevant economic sector

Projected manpower requirement of economic sector

concerned in 2007

Assumed proportion to

economic sector concerned in 2007

Projected manpower requirement for

the logistics segment in 2007 (%)

(a) Freight transport

(i) Land Land transport 226 100 52.9 119 500

(ii) Water Water transport 31 600 92.3 29 200

Services incidental to transport

54 400 33.3 18 100

(iii) Air Air transport 29 700 63.1 18 700

54 400 22.1 12 000

(iv) Others (e.g. cargo inspection, sampling and weighting services)

54 400 3.9 2 100

(b) Storage Storage and

warehousing

5 900 100.0 5 900

(c) Miscellaneous

communications services

Communications (other than tele- communications)

30 000 100.0 30 000

Entire logistics segment 235 600

(28)

Annex 9a

by occupation category

in 2001

in 2007 Change in 2007 over 2001

Number % share Number % share Number % change

Average annual %

change Managers and

administrators 126 700 15.9 143 700 17.2 17 000 13.4 2.1

Professionals 17 400 2.2 21 900 2.6 4 600 26.3 4.0

Associate professionals 180 200 22.7 236 200 28.2 56 000 31.1 4.6

Clerks 277 700 34.9 234 100 28.0 -43 600 -15.7 -2.8

Service workers and

shop sales workers 11 000 1.4 10 500 1.3 -400 -3.9 -0.7

Craft and related workers 13 100 1.6 13 900 1.7 700 5.6 0.9

Plant and machine operators and

assemblers 90 700 11.4 102 400 12.2 11 700 12.9 2.0

Elementary occupations 78 500 9.9 74 600 8.9 -3 900 -5.0 -0.8

Overall 795 300 100.0 837 300 100.0 42 000 5.3 0.9

Source : 2001-based Manpower Requirement Projection by Occupation Category and Educational Attainment within Economic Sector, Education and Manpower Bureau.

(29)

Annex 9b

Projected manpower requirement for the trading sub-sector in 2007

in 2001

in 2007 Change in 2007 over 2001

Average annual %

change Managers and

administrators 112 600 19.0 123 700 20.6 11 100 9.9 1.6

Professionals 14 800 2.5 18 800 3.1 4 000 27.2 4.1

Clerks 230 100 38.9 185 800 30.9 -44 300 -19.3 -3.5

Service workers and

shop sales workers 8 100 1.4 7 600 1.3 -500 -6.5 -1.1

Craft and related workers 11 000 1.9 12 400 2.1 1 500 13.3 2.1

assemblers 12 900 2.2 12 600 2.1 -300 -2.4 -0.4

Elementary occupations 35 700 6.0 27 200 4.5 -8 400 -23.6 -4.4

Overall 591 300 100.0 601 700 100.0 10 400 1.8 0.3

(30)

Annex 9c

Projected manpower requirement for the logistics sub-sector in 2007

in 2001

in 2007 Change in 2007 over 2001

Average annual %

change Managers and

administrators 14 100 6.9 19 900 8.5 5 800 41.4 5.9

Professionals 2 600 1.3 3 100 1.3 500 21.5 3.3

Clerks 47 700 23.4 48 400 20.5 700 1.4 0.2

Service workers and

shop sales workers 2 900 1.4 3 000 1.3 100 3.6 0.6

Craft and related workers 2 200 1.1 1 400 0.6 -700 -33.5 -6.6

assemblers 77 800 38.1 89 800 38.1 12 000 15.5 2.4

Elementary occupations 42 800 21.0 47 400 20.1 4 500 10.5 1.7

Overall 204 000 100.0 235 600 100.0 31 600 15.5 2.4

(31)

Annex 10a

by educational attainment

in 2001

Projected manpower

requirement in 2007 Change in 2007 over 2001

Average annual %

change

Postgraduate 12 600 1.6 18 800 2.2 6 200 49.1 6.9

First degree 95 100 12.0 144 900 17.3 49 800 52.3 7.3

Sub-degree 31 100 3.9 71 500 8.5 40 400 130.1 14.9

Technician 26 600 3.3 32 600 3.9 6 000 22.5 3.4

Craft 2 000 0.3 2 000 0.2 # -1.1 -0.2

Matriculation 66 300 8.3 78 100 9.3 11 800 17.8 2.8

Upper secondary 326 700 41.1 280 700 33.5 -46 000 -14.1 -2.5

Lower secondary and

below 234 900 29.5 208 800 24.9 -26 100 -11.1 -1.9

Overall 795 300 100.0 837 300 100.0 42 000 5.3 0.9

Notes : (#) Change in number being less than 50.

(32)

Annex 10b

Projected manpower requirement for the trading sub-sector in 2007

in 2001

Average annual %

change

Postgraduate 11 000 1.9 16 000 2.7 5 000 45.3 6.4

First degree 85 100 14.4 129 700 21.6 44 700 52.5 7.3

Sub-degree 28 000 4.7 62 500 10.4 34 600 123.6 14.4

Technician 23 400 4.0 27 500 4.6 4 100 17.3 2.7

Craft 1 600 0.3 1 400 0.2 -200 -10.8 -1.9

Matriculation 56 500 9.6 64 100 10.7 7 700 13.5 2.1

Upper secondary 261 200 44.2 205 800 34.2 -55 400 -21.2 -3.9

Lower secondary and

below 124 500 21.1 94 600 15.7 -29 900 -24.0 -4.5

Overall 591 300 100.0 601 700 100.0 10 400 1.8 0.3

(33)

Annex 10c

Projected manpower requirement for the logistics sub-sector in 2007

in 2001

Average annual %

change

Postgraduate 1 600 0.8 2 800 1.2 1 200 75.8 9.9

First degree 10 000 4.9 15 100 6.4 5 100 50.7 7.1

Sub-degree 3 100 1.5 9 000 3.8 5 800 188.2 19.3

Technician 3 200 1.6 5 100 2.2 1 900 60.5 8.2

Craft 400 0.2 500 0.2 200 39.4 5.7

Matriculation 9 800 4.8 14 000 5.9 4 100 41.9 6.0

Upper secondary 65 500 32.1 74 900 31.8 9 500 14.5 2.3

Lower secondary and

below 110 400 54.1 114 200 48.5 3 800 3.5 0.6

Overall 204 000 100.0 235 600 100.0 31 600 15.5 2.4

(34)

Annex 11

Econometric model for projecting

manpower requirement in trading and logistics up to 2007

Model structure

Based on the actual data input for 1991-2001, two single-equation models are calibrated for projecting the manpower requirements in trading and in logistics. By reference to a priori reasoning and revelation from the test statistics, the following two models are chosen :

log EMTRADE_t = 5.077 + 0.552 log TTVALUE_t (8.17) (13.10)

R² = 0.9502 R² = 0.9447 DW = 1.792

log EMLOG_t = 6.123 + 0.409 log TTVOL_t (10.16) (9.98)

R² = 0.9171 R² = 0.9079 DW = 1.833

Note : ( ) Figures in brackets represent the t-statistics of the respective regression coefficients.

where EMTRADE_t = manpower requirement in the wholesale and import/export trade in period t

EMLOG_t = manpower requirement in the logistics segment in period t TTVALUE_t = value of Hong Kong’s total trade at current market prices in

period t

TTVOL_t = value of Hong Kong’s total trade at constant (2000) prices in period t

(35)

Assumptions

2. The input assumptions adopted for the explanatory variables are summarised below :

(a) The value of Hong Kong’s total trade is assumed to grow by an average of around 0.5% per annum over 2002-07, broadly similar to the trend growth rate between 1997 and 2002.

(b) The volume of Hong Kong’s total trade is assumed to grow by an average of around 3.5% per annum over 2002-07, also in line with the trend during 1997-2002.

Projection results

3. The projection results are summarised below :

Manpower requirement in :

Actual average annual growth

Projected average annual growth rate over rate over

1991* 2001* 2007⁺ 1991-2001 2001-07

Trading and logistics 571 700 795 300 860 500 3.4 1.3

Of which :

Trading 421 700 591 300 630 300 3.4 1.1

Logistics 150 000 204 000 230 300 3.1 2.0

Notes : (*) Actual/imputed figures.

(+) Projected figures.