Whether the Construction Industry Is the ‘Pillar’ Industry in Hong Kong?

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BRE216ECONOMICS FOR CONSTRUCTION AND REAL ESTATE
Kwan Tsz Him (11168188D) Kwan Cheuk Pui (11055717D) Cheng Ming Xian (11704592D)

Introduction
Although Hong Kong has less land, there are always construction projects happening everywhere in Hong Kong, for example, West Kowloon Cultural District development, Kwun Tong redevelopment project, etc. However, workers and capital involved in the construction industry have been decreasing. In this report, we will discuss whether the construction industry is the ‘pillar’ industry in Hong Kong and we disagree with it.

Focused industries
As proposed by the Government decades ago, there are four ‘pillar’ industries in Hong Kong, namely, financial services, trading and logistics, tourism and producer and professional services. They account for about 60% of GDP and nearly half of the total workforce, in which construction industry is counted in the producer and professional services. In the 21st century, the Government wants to look forward and follow the trend of technological and advanced world, they proposed another six new ‘pillar’ industries, concerning testing and certification, medical services, innovation technology, culture and creative industries, environmental industry and education services, in which construction industry is not counted in any ‘pillar’ industry and no longer treated as important by the Government.

Features of local construction industry
There are several features for local construction industry in Hong Kong, with dangerous working environment being the major one. Without doubt, accidents happen all the time in Hong Kong when you simply flip through the newspaper. Some of the accidents are inevitable while some happened due to carelessness. For example, the workers may not be aware of the safety regulations, accidents always happen while the workers do not obey the safety regulations as well as not to follow the working regulations.

Besides, competition between overseas contractors is keen. Nowadays, a lot of construction projects in Hong Kong are outsourced to overseas contractors. It is because the technology is more advanced in overseas countries such as in Germany, the United States, France, etc. With reasonable price and advanced technology, the other countries sometimes are more competitive.

Moreover, labor intensive is also the label of construction industry in Hong Kong. Limited land with high population is a characteristic for Hong Kong. Labor can be easily found, however, is only applicable in the past. This will be examined in the report later. Concerning the environment, pollution is in line with the construction industry to a large extent. Since construction work will inevitably pose noise, air and sometimes water pollution. The pollution extent depends on the scale of the project. Basically, the larger scale of a construction project, the greater the pollution will be resulted.

Reasons of excluding construction industry as pillar an industry in Hong Kong As mentioned before, the feature of labor intensive can only be described in old years due to the transformation of economy. In late 80s, the HKSAR has been transforming the whole economy from labor intensive industry to commercial industry which is defined as tertiary services as finance and accounting, investing, banking and so on. In such knowledge-based society, the unemployment rate for those with low education level could be especially higher.

Also, there is no new blood to enter such industry. This can actually be explained by the above phenomenon. Nowadays, most of the workers are 50 years old or above and the industry faces the aging problem. As this cannot be fixed, construction industry will decline gradually. Nowadays, the opportunity of receiving proper education is higher, thus the citizens do not willing to enter to an industry with gloomy future.

Diagram showing the percentage of population distribution in different working sectors

As for the...
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