DEVELOPMENT OF KNOWLEDGE-BASED ECONOMY
TO SUSTAIN HONG KONG'S GROWTH

Hong Kong must develop an adequate supply of higher-knowledge employees in order to become the metropolitan city of South China and to revitalise its underlying growth engine, according to the latest issue of the Hang Seng Economic Monthly.

The territory must also enhance its commitment to human resource development to promote productivity gains, economic growth and employment opportunities, the report states. As the world enters the knowledge era, an educated workforce has become the most important competitive factor. Given that the market for talent is not limited to any geographical boundary, Hong Kong's ability to attract and retain the best talent is of critical importance in the global competition for talent. In the past few years, a transition to a knowledge-based economy has been heralded as the means for Hong Kong to sustain economic growth and maintain its high living standards, according to the report. The territory's competitive edge now rests with delivering value-added services to its neighbouring territories in logistics, financial and various professional fields, the report states. A knowledge-based economy relies on human capital as the critical factor of production and the main driver for growth through innovation and efficiency gains. Knowledge acquisition and distribution would be its core activities. As the Hong Kong economy moves to a knowledge-based footing, there has been a shift from manual jobs to jobs requiring a higher knowledge level in problem-solving and managerial skills across all industries, the report states. The proportion of Hong Kong's employed workforce taking up professional and managerial posts rose significantly to 32% in 2001 from 13.5% in 1990, reaching a total of 1.05 million. Manual employees fell to 1.18 million in 2001, with their share of employment falling from 55% to 36% over the same period. The importance of knowledge in the workplace and the emphasis on human capital are also reflected clearly in the wage trend. The real wage in Hong Kong for skilled labour, including professionals and managerial staff, rose at a faster rate than that for manual employees by a cumulative 9.6% over the past 10 years. Since the real wage is a reflection of labour productivity, this demonstrates that as the knowledge level of an economy increases, the overall productivity of the economy increases, the report states. Employees with higher education can also find jobs more easily and experience lower unemployment. In the past 10 years and despite the rising unemployment since the Asian financial crisis, the unemployment rate for employees with a university degree has been 1.3 percentage points lower than that for the total workforce in Hong Kong. In addition to shaping the labour market by stimulating more efficient methods of production, a knowledge-based economy affects the lifestyle of people through the launch of new and improved products and services. For instance, despite the bursting of the internet stock bubble in 2000, internet technology remains an excellent platform for businesses and individuals to communicate and carry out financial transactions not involving physical delivery of goods. Lifestyle changes are also affecting the interaction between customers and service providers, as the financial industry illustrates. Customers increasingly prefer to use self-service automated channels while bank staff must equip themselves with greater financial knowledge to deliver the higher value-added wealth management services customers are demanding. In a knowledge-based economy, knowledge acquisition is no longer a stage in the life cycle. Life-time learning is itself a lifestyle, the report states. As such, the increase in job-related training and extra-mural studies in recent years should be encouraged.