talent for a knowledge-based and innovation-oriented economy: hong kong’s challenges and...
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Talent for a Knowledge-Based and Innovation-Oriented Economy:Hong Kong’s Challenges and Opportunities
David M. Hart and Fangmeng Tian School of Public Policy, George Mason University
Hong Kong Innovation Project Conference
10 January 2009
Presentation Outline
I. Empirical context and theoretical background
II. Human resource indicators:• Undergraduate degrees
• S&T undergraduate degrees
• High-occupational status
• R&D and IT workforce
III. Policy options
Part I. Empirical Context and Theoretical Background
Empirical Context
Hong Kong’s long-term economic growth
Rapidly changing regional/global environment:• Mainland China• East Asia• Global business restructuring
Intensifying international competition for talent
Hong Kong demographics and location
Theory: Human Capital and Growth
General human capital
Knowledge-based economic
growth
Specialized human capital
(S&T fields)
Growth ofInnovation-oriented
industries
High-skill migration
Industrial clustering
“Demand-pull”
“Supply-push”
Part II. Human Resource Indicators
A. Undergraduate degreesB. S&T undergraduate degreesC. High-occupational statusD. R&D and IT workforce
Data Sources
Hong Kong Census General Household Survey Hong Kong as a Knowledge-Based Economy Hong Kong as an Information Society R&D Statistics of Hong Kong UGC and Immigration Department statistics Personal interviews International sources
Undergraduate Degrees, All - Supply
1996-2006: • Total increase: 70%• Annual growth rate: 5.5%• Doubling time: 13 years
Lags behind other “global cities” (NY, London, Tokyo)
Comparable to regional centers (Singapore, Shanghai)
Undergraduate Degree Holders in HK Working Population
0
100000
200000
300000
400000
500000
600000
700000
1996 2001 2006
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Degree hol ders i n worki ng popul at i on Share i n worki ng popul at i on
Degree Holders in Resident Population in Global Cities
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
4500000
NYC Tokyo BJ London SF SH Tai pei HK SG VC0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Degree hol ders i n resi dent popul ati on Share i n resi dent popul ati on
Undergraduate Degrees, All – Estimated Flows, 2006
20,000 local graduates
16,500 GEP
5,000 ASMTP
Total flow 48,000 degree holders
12,000 leave HK
6,500 returnees
10,000 stay in HK but do not work.
26,000 join HK labor force.
Undergraduate Degrees, All - Demand
Employment has grown steadily.
Unemployment rate has trended down recently.
Income gap between degree attendees and those with less education widened considerably.
Earned income of highly-educated peaked in 2001.
Medi an I ncome of HK Degree Hol ders
0
5000
10000
15000
20000
25000
1996 2001 2006
HKD
Sub-degree/ di pl oma Degree
S&T Undergraduate Degrees - Supply
1996-2006: • Total increase: 62%• Annual growth rate: 5%• Doubling time: 14 years
S&E Degree Holders in HK's Working Population
0
50000
100000
150000
200000
250000
300000
1996 2001 2006
0%
1%
2%
3%
4%
5%
6%
7%
8%
S&T degree hol ders i n worki ng popul at i on Share i n worki ng popul at i on
S&E Degree Holders in Working Population in Global Cities
0
50000
100000
150000
200000
250000
300000
350000
400000
Hong Kong Si ngapore Vancouver
0%
5%
10%
15%
20%
25%
30%
35%
S&E Degree hol ders i n worki ng popul at i on Share i n worki ng popul at i on
International comparisons are only suggestive due to limited data collection, definitional differences, and varying dates.
S&T Degrees: Flows and Demand
Estimated flow of S&T degree holders:• Annual net inflow: 9300 • UGC graduates: 8600• Returnees: 2500 • Foreign-born: 3000 • Departures or did not work in HK: 4800?
Labor Market:• Employment growth of S&T degree holders lags all degree holders.• Salaries peaked in 2000 and remained about 10% below peak in 2006, lag
ging other fields. • Interviews point to possible shortages in specific sub-disciplines.
High Occupational Status (HOS) – Supply
1996-2006:•Total increase: 25%•Annual growth rate: 2.2%•Doubling time: 30 years•43% hold undergraduate degrees in 2006 vs. 33% in 1996•80% of growth among associate professionals •Number of managers and administrators shrank•International comparisons are slightly more favorable than for education.
Definition: Managers and administrators, professionals, and associate professionals
High Occupational Status in HK's Working Population
0
200000
400000
600000
800000
1000000
1200000
1996 2001 2006
27%
28%
29%
30%
31%
32%
33%
34%
HOS i n worki ng popul ati on Share i n worki ng popul ati on
HOS in Working Population in Global Cities
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
4500000
Si ngapore Hong Kong Tai pei SF Shanghai Bei j i ng Tokyo New York
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
HOS i n worki ng popul ati on Share i n worki ng popul ati on
HOS: Flows and Demand
Growth in the HOS population is not even over time.
Cumulative growth is almost entirely among the Hong Kong-born.
Only about 6% of holders of HOS positions lived outside HK in the five years prior to 2001 and 2006.
Salaries overall rose fairly steadily, but managers and administrators did much better than professionals and associate professionals.
Sal ary I ndi ces for Manageri al andProfessi onal Empl oyees
100105110115120125130
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Nomi nal Sal ary Real Sal ary
R&D Workforce: Supply
R&D researchers in HK's labor force
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
1998 1999 2000 2001 2002 2003 2004 2005
0.0
1.0
2.0
3.0
4.0
5.0
6.0
R&D researchers Number of researchers per 1000 workers
1998-2006:•Total increase: 154% •Annual growth rate: 12%•Doubling time: 6 years.
Especially strong in the business sector:•10,000 new R&D jobs •350%+ growth
But from a low base…HK has relatively low R&D share of workforce.
Note: no official estimates of the S&T working population comparable to U.S.
R&D Personnel in Global Cities / Regions
0
20000
40000
60000
80000
100000
120000
140000
160000
Hong Kong Si ngapore Bei j i ng Tai wan
0%
0%
0%
1%
1%
1%
1%
1%
2%
R&D personnel Share i n worki ng popul at i on
R&D Workforce: Flows and Demand
In-migration plays a small role:• The vast majority of R&D positions are filled by HK-born permanent residents.• About 1/3 hold their highest degrees from non-local universities. • About 10% reported living outside HK five years earlier.• Local universities doubled the number of graduate degrees awarded in S&T fields over the past decade.
The market for R&D talent is fairly tight: •A significant number of establishments identified lack of qualified personnel as an important barrier to innovation. •But salaries seem to have declined between 2001 and 2006.
High-Skill IT Workforce: Supply
1996-2000: 70% growth2000-2006: 8% decline
Many more HK residents acquired advanced IT/computer training than hold high-skill IT jobs.
We did not find comparable international data for this indicator.
Source: Hong Kong as a Knowledge-based Economy (2007)
High-Skill IT Workforce: Flows and Demand
Only about half hold undergraduate degrees.
In-migration plays a small role:• Well under 5% are not permanent residents.• About a third of those who hold a degree received
their highest degree abroad.
Incomes declined between 2001 and 2006.
HR Indicators: General Observations (1)
Hong Kong has been accumulating human capital, both general and specialized to science and technology, at a relatively rapid rate in the past decade.
The demand for this talent kept pace reasonably well overall,
although income data suggest some softness in recent years.
There is evidence of a talent shortage only in a few specific categories, notably (in our review) for managerial, executive and R&D positions and (anecdotally) for certain engineering specialties (which our data are too coarse to confirm).
HR Indicators: General Observations (2)
HK’s talent pool still trails the leading “global cities” with which it is often compared.
HK appears to be keeping up, broadly speaking, with its competitors in East Asia, but these competitors are developing quite rapidly themselves.
Part III. Policy Options
Policy Options: General Observations (1)
Preface: investing in higher education has value beyond the economic context.
The SAR government has paid attention to HR and should continue to do so.
Maintaining the momentum of the past decade is likely to be challenging, and these challenges would be heightened if the government seeks to accelerate the pace.
Policy Options: General Observations (2)
HK will probably need to find ways to reach out more assertively to the rest of the world for talent, especially to mainland China.
HR supply policies should be embedded in broader packages
that also incorporate demand considerations, especially for specialized fields.
Matching HR supply and demand may require stronger central coordination within the SAR govt.
Policy Options: Higher Education (UGC)
Expand undergraduate programs in UGC-funded institutions:
• <1% annual growth over the past decade.
• An additional 4K degrees per year by 2020 would require growth that is 3x as fast.
Enroll more mainland and foreign students in these programs:
• Current share is about 10%.
• This share may need to triple or quadruple.
• Mainland students may require financial support, which might be linked to post-graduation work in HK.
Continue to allow disciplinary composition to be demand-driven.
Policy Options: Higher Education (Non-UGC)
Facilitate capacity expansion and regulatory framework for “top up” programs for degree completion:
• “Phenomenal” growth in self-financed sub-degrees.
• Not necessarily perceived to be a terminal degree.
• Accommodates non-traditional students.
Policy Options: Immigration (ROW)
Develop a diaspora “policy”:• 290K skilled HK expatriates in OECD countries
Maintain GEP:• Demand-driven, employer-led• Address related quality of life issues?
Promote HK to potential skilled immigrants through Invest HK, rather than Immigration Dept.?
Policy Options: Immigration (mainland)
Continue to expand ASMTP incrementally:• Roughly ¼ the size of GEP now• Demand-driven
Implement and promote IANG and related programs:• Prior experience abroad or HK education enhance odds of suc
cessful integration• Demand-driven
Continue to refine and promote QMAS:• Link to broader economic strategy • Delegate discretion to outside advisors
Conclusions
A sound basis has been laid for continued movement into the knowledge-based and innovation-oriented economy:
• Excellent higher education system• Nascent achievements in skilled immigration policy
Accelerating the pace of human capital formation may be a crucial part of a broader economic development strategy:
• Address institutional and demographic constraints• Bear demand factors in mind
