Epidemics, labour markets and unemployment: the impact of SARS on human resource management in the Hong Kong service sector

Abstract

This article examines the links between epidemics and their economic consequences, specifically in terms of their impacts on labour markets and jobs. To exemplify the above, we examine the effects of SARS (Severe Acute Respiratory Syndrome) on the Hong Kong economy, its labour market and its level of employment and unemployment. The article hypothesizes that the greatest impact would be on human resource management (HRM) in the service industries and on particular sub-sectors, such as the hotel sector. It concludes that the dramatic demand and supply ‘shocks’ significantly affected both the demand for and the supply of labour in the sector, with discernible HRM consequences.

Keywords:

• Asian economy
• epidemics
• employment
• Hong Kong
• hotel sector
• human resource management (HRM)
• labour market
• People's Republic of China (PRC)
• Severe Acute Respiratory Syndrome (SARS)
• service sector
• uncertainty
• unemployment

Notes

1 This figure seems extraordinarily large and there is no robust way to judge if it was an overestimate.

2 We will see later in this article that the rise in unemployment even after the SARS epidemic had passed was relentlessly upward.

3 The psychological impact of SARS cannot be underestimated. This may have been because the WHO had declared that the virus, from the Corona family, was new and there was no treatment or vaccine at hand to deal with it.

4 We have no objective corroboration of this account but it does seem plausible in the circumstances.

5 The coefficient between the hotel sector and macro-level unemployment was highly geared as one might expect, since the former was more demand-sensitive.

6 According to our field interviews, HR managers were genuinely impressed by the ‘understanding’ exhibited by their employees in the course of the emergency, although the workers had apparently no ‘realistic’ alternative but to ‘comply’ with management initiatives in what was by all accounts a very ‘testing’ situation for all concerned.