One-third of firms said more than 25% of their personnel decided to leave Hong Kong due to quarantine restrictions for international travel.
Due to the implementation of arguably some of strictest anti-epidemic measures in the world, nearly half (49%) of European companies in Hong Kong are considering fully or partially relocating to other places in the next 12 months, as revealed by the latest survey of the European Chamber of Commerce in Hong Kong (EuroCham).
The study has interviewed 260 individuals through an online questionnaire with 15 multiple-choice questions. These individuals represent the different national chambers of commerce under EuroCham, including Belgium/Luxembourg, Danish, Dutch, Finnish, French, German, Greek, Irish, Italian, Lithuanian, Norwegian, Portuguese, Spanish, and Swedish, and 70% of respondents represent companies with less than 100 employees.
The survey found that 25% of the respondents said they will fully relocate out of Hong Kong in the next 12 months, and 24% were planning to move partially. Only 17% said they do not have any relocation plans, while the remaining 34% said they are not sure (See above lead image).
Frederik Gollob, Chairman of EuroCham said in the report that the “zero COVID” or “dynamic zero COVID” strategy adopted by the Hong Kong SAR government has diminished the city's biggest advantage - "its connectivity to the entire world and connector to mainland China".
The ongoing quarantine and travelling restrictions have severely hampered the mobility of people, making it more difficult for businesses to attract and retain talent, which is considered one of the major reasons driving businesses away from Hong Kong.
According to the report, one-third of firms said more than 25% of their personnel decided to leave Hong Kong due to quarantine restrictions for international travel.
In this context, more than half of the respondents said there was an unusually or very unusually high staff turnover happening in their company in Hong Kong during the last two years (rating of three or above on a scale of one to five).
The data showed that there was a direct relationship between staff turnover and the company's size. Almost 70% of firms with more than 100 employees recorded an unusually high staff turnover in the same context. However, there were no significant differences between local and multinational companies, as well as between companies that had their regional headquarters in Hong Kong and those that did not.
To fill the vacancies, nearly two-thirds (65%) of respondents said their firm has been hiring or seeking to add new headcount in Hong Kong during the last two years. Companies with a higher number of employees have tended to hire more staff as they have experienced an unusually high turnover.
However, more than two-thirds (67%) of companies that have been actively hiring during the last two years have also experienced difficulties with bringing talent into Hong Kong from overseas due to the quarantine or other restrictions related to COVID-19 such as the lengthy and uncertain process to secure visas, the closure of schools, and other social distancing measures.
To help deal with the difficulties resulting from the pandemic measures, the Hong Kong government has launched multiple phases of the Employment Support Scheme for businesses. Although 58% of respondents said they had received funding from the government, the support might not be as effective as it intended as the average score given by the respondents was only 2.2 out of five, and only 8% gave a score of four out of five or above.
While the financial support from the government has somehow assisted companies to retain their staff and operations during the COVID-19 pandemic, seeing as those that have received financial support have observed lower staff turnover than those that have not received any support (2.5 and 2.9, respectively), it does not appear to have a significant effect on the hiring activity of companies.
In particular, 66% of the companies that have received government funding responded that they are currently hiring, just 3% higher than those that have not received any financial support from the government.
Images / EuroCham