Labour market

The relationship between demographics and the labour market is often not given the attention it deserves. Let us look into it in more detail.

Graph 1 displays the development of the population, the labour force and the employed population, in absolute figures.

While they appear to run in parallel, these series hide significant relative changes. Over the given period, the population has grown by an average of 2.5 percent a year, which is statistically significant.

Between 2003 and 2008, the annual growth rate exceeded 4 percent, a value that would allow the population to double in 16 years. A slight dip in 2009 seems to have been reversed the following year.

In another significant change, the total labour force has increased by about 120,000 people in the period of our analysis. That resulted in a leap of its share, from less than half to about 60 percent of the population. This is different to the participation rate, which has also increased but is not represented here.

Employment has closely followed this development, as we might expect since the increase in the natural population has been small and most growth has resulted from inflows of workers.

Overall, unemployment has stood at very low levels.

Graph 2 This graph shows key indices – employment, unemployment and median wages – with the base year set as 1999. They amplify the labour market trends mentioned previously and neatly illustrate three different periods. The first, from 1999 to 2003, represents stagnation. The second, between 2004 and 2007, shows a boom period. The final period, from 2008 to last year, is a time of unwieldy changes.

Graph 3 Illustrated here is a plot of average wages for various sectors, based on the twice-yearly surveys made by the Statistic and Census Service. As the sector surveys are not made at the same time each year, direct comparisons must be made with care.

Overall, there are very different tales in the labour market. We see marked differences between the top paying and most dynamic sectors, which have been expanding fast due to the gaming boom, and the rest.

For reference, the evolution of the wage median is included; but note that the survey data provided is for average wages.

Consumption expenditure

Household consumption expenditure levels have increased across most categories recently, both as a result of increasing income and a growing population.

Graph 4 Here we illustrate real household consumption expenditure broken into some relevant components. Real consumption has increased by almost 60 percent.

Two important indicators of increasing wealth are present. First, the absolute growth in consumption of food and drinks, and its slightly declining relative share of total consumption; and second, the consumption of durable consumer goods has doubled.

Graph 5 There has been no dramatic change in the relative share of each of these categories when compared to total consumption, with a combined range of between 30 to 32 percent.

Graph 6 The overall per capita household consumption expenditure has grown more slowly that the comparable figure for durable consumer goods. In real terms from 2002 to 2009 it has grown by 20 percent, which represents a respectable rate of 2.7 percent a year. For durable consumer goods, the rates are 33 percent and 4.2 percent, respectively.

The figure for food, beverages and tobacco consumption show modest changes of 10 percent and 1.5 percent, respectively. This change could be considered mostly stable.

The trajectory of food consumption is of particular interest, bearing in mind that food prices are a major component of the consumer price index. Nothing in the values shown here suggests a sharp increase in internal demand that could constitute a significant driver of food prices.

by José I. Duarte
Economist /Macau Business
Senior Analyst Data source: DSEC
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