Cathay ripple effect to be felt across city

Top News | Sophie Hui and Michael Shum 23 Oct 2020

The unemployment rate could reach 7 percent by end of the year, with the Cathay layoff causing a ripple effect of more sackings and salary cuts in the city.

Simon Lee Siu-po, a senior lecturer at Chinese University's business school, said there may be more layoffs of engineers and technicians in the aviation industry.

He estimated that 30 to 40 percent of airline employees may eventually be dismissed.

"Some small and medium-sized companies may think that because Cathay still sacked people despite getting [financial] support from the government, they have a reason to lay off staff too," he said.

Lee is also worried that the labor market will worsen after the Employment Support Scheme ends next month and that the jobless rate will climb to 7 percent by year-end.

Lee hopes the government will extend the wage subsidy scheme to prop up workers' salaries between December and February to avoid joblessness worsening.

The chairman of the Staff and Workers Union of Hong Kong Civil Airlines, Li Wing-foo, said the shutdown of Cathay Dragon affected its affiliates, such as a catering company that saw 60 percent of its business come from the airline.

At least three other companies are responsible for the repair and cleaning of its aircraft.

"The whole Cathay Dragon brand disappeared, and the supply chain behind the brand is also affected, including companies providing catering, cleaning and maintenance services to the airline," Li said.

The union said employees responsible for providing catering and cleaning service for Cathay Dragon were mostly grassroots workers and that it will contact relevant companies to learn how these firms are coping with the situation.

As thousands of fired Cathay staff enter the job market at once, they may not be able to immediately find work, especially in the hospitality industry, which has already been hit hard during the pandemic.

Employers may also be prompted to lower salaries even more.

Worldwide Consulting Group managing director Armstrong Lee Hon-cheung said those Cathay workers that got pink slips specialized in providing hospitality to customers.

"When a flock of unemployed workers suddenly appears in the labor market, employers might think there are more job seekers and offer lower salaries," he added.

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