The English proficiency of local youths has declined and the SAR is now placed seventh among 12 Asian neighbors, falling behind even Japan and South Korea.
According to an international English study center, Education First, Singapore is ranked first among Asian nations, followed by Malaysia, India and Pakistan.
South Korea and Japan are ranked fifth and sixth.
In a similar study by the group between 2007 and 2009, Hong Kong was ranked second among 10 rivals.
Hong Kong General Chamber of Small and Medium Business president David Ting Tit-cheung agreed with the findings, saying graduates cannot even write proper job applications.
"It is apparent that the English proficiency level of university graduates and young workers has dropped in the past few years," Ting said. The education center operates in many cities and compares students' English proficiency through a standard test.
The study involved 54 cities and nations covering 1.7 million test takers between 2009 and 2011.
Hong Kong was ranked 25th.
More than 400 people took the Hong Kong language test covering grammar, writing, reading and listening skills.
The group's country manager, Joe Chiu Sung-kei, said the latest study shows that the proficiency level of local people has declined slightly when compared with that of counterparts. "In the past few years, the English proficiency level of Japanese and South Korean youths has improved."
Although the study did not examine why English proficiency has deteriorated in Hong Kong, Chiu said he believes it may be related to the introduction of the mother-tongue as medium of instruction in schools after the handover.
"Indeed, a student's exposure to the English language has been reduced in classes since the mother-tongue was used as a medium of instruction," Chiu said.
Centaline Human Resources Consultants managing director Alexa Chow Yee-ping agreed.
"Local workers generally spend more time studying Putonghua rather than English as they need to work in the mainland and communicate with their mainland clients amid closer economic integration," Chow said.