Hong Kong's youth unemployment has reached a critical point, with official figures showing that 8.4% of residents aged 20 to 29 were out of work between May and July this year — more than double the territory's overall jobless rate of 3.7%. With artificial intelligence displacing routine tasks and companies tightening hiring, young people are finding the door to their first job increasingly difficult to open. The number of full-time vacancies suitable for university graduates has plummeted from approximately 80,000 in 2022 to just 31,000 in 2025, reflecting a fundamental shift in the labour market landscape.

AI Erosion of Entry-Level Jobs

The traditional stepping stones that once launched young careers are disappearing at an alarming pace. Chu Wing-chong, chief employment consultant at the Project SEED youth employment scheme, observed that administrative support, clerical duties, and other junior positions that historically served as entry points are being systematically replaced by AI and automation. "It's no longer the case that a young person willing to learn and work hard will definitely find a job," she warned. She also noted a widening gap between what young job seekers expect — such as meaningful work and room for growth — and what the market actually offers, a mismatch that can lead to quick turnover even when employment is secured.

The Labour Department refers young people in need to the scheme each year, but the volume of referrals has surged by roughly 200 to 300 cases compared with the same period last year, an increase of nearly 100 per cent. Wong Man-shun, unit head of the Youth Employment Network at the Hong Kong Federation of Youth Groups, likewise highlighted AI's disruptive impact. He pointed to an unusual development: in the past six months, universities have proactively reached out to ask whether counselling services could be provided to graduates who have yet to find work. "The number of university graduates who graduated last year and still haven't found jobs has really increased," he said.

Economic Headwinds and Cost Discipline

Beyond technology, the broader economic climate is compounding the challenge. Yip Wai-kwong, deputy director of the Centre for Human Resources Strategy and Development at Hong Kong Baptist University's School of Business, explained that organisations are keeping a tight lid on costs while persistent political uncertainty in the United States makes them cautious about business expansion. Rather than adding headcount, many employers are asking existing staff to take on additional responsibilities. With fewer openings and more applicants, hiring standards have risen — particularly regarding work experience — making it even harder for inexperienced youth to stand out.

Lee Hon-cheung, managing director of Global Management Consultancy, attributed part of the rise to seasonal factors: the recent graduation period brought a surge of new job seekers into the market, while the number of available positions failed to keep pace. His conversations with employers reveal a strikingly cautious mood. "When I ask employers, many say they have no vacancies, and these are mostly large enterprises," he said. "If the big companies are this cautious, small and medium-sized enterprises must be even more conservative." He added that even when companies are willing to hire young people with one to two years of experience, they increasingly prefer short-term contracts — some as brief as three months — before deciding whether to convert them to permanent staff based on business conditions and performance.

The Rising Tide of Non-Local Graduates

Labour union legislator Lam Chun-sing addressed whether government talent attraction programmes are intensifying the competition. Using the Top Talent Pass Scheme as an example, he noted that most applicants earn at least HK$2.5 million annually or possess significant work experience, meaning their roles rarely overlap with those sought by fresh graduates. However, he expressed concern about the Immigration Arrangements for Non-local Graduates (IANG) scheme, which has seen applications grow from roughly 8,000 to 9,000 per year before the pandemic to nearly 25,000 today. He suggested the government should review hiring trends in specific industries and, if difficulties for local graduates are confirmed, consider requiring employers to prioritise local students.

Yip echoed this concern, noting that non-local students who complete about four years of study in Hong Kong can remain for an additional two years to seek work, effectively competing with local graduates. With roughly 10,000 new graduates entering the job market annually and few emerging industries to absorb them, the competitive pressure is unmistakable.

Pathways Forward: Skills, Experience and Structural Support

Lam urged the government to use its upcoming manpower projection report to adjust academic quotas and hopes the forthcoming Skills Enhancement Bureau will offer more courses tailored to university degree holders. Wong suggested borrowing from international practices, such as government intervention when graduates remain unemployed for four to six months to help them reintegrate. He also emphasised the need to treat youth employment as a matter of support rather than a "problem," pointing out that existing programmes primarily serve those with sub-degree qualifications or below, leaving university graduates without dedicated assistance despite the sharp decline in suitable vacancies.

Yip recommended that both the government and educational institutions engage in early dialogue about future manpower needs and the attributes required of talent. Using the low-altitude economy as an example, he suggested universities should advise the government on emerging industries and new technologies, while the government should guide universities on the skills and knowledge that will be in demand. For students, he advocated active participation in internships and exchange programmes to broaden horizons and build experience, citing the "sandwich course" model used abroad, where students spend a year working in industry during their studies.

Lee advised young people to seize every opportunity to learn AI-related skills and strengthen their competitiveness in both knowledge and technical ability. Even unpaid internships, he said, can be valuable — volunteer work with social welfare organisations also helps build real-world experience and enriches one's CV.

Delaying Entry: The Rising Appeal of Further Study

An increasing number of young people are choosing to postpone entering the workforce by pursuing further education. Legislative Council research shows that in 2025, the proportion of young people enrolled in study reached 68.5 per cent, while the employment rate fell to 25.2 per cent. Chu noted that some parents prefer to keep their children out of the workforce for longer, and the young people themselves share this sentiment. With a wide array of degree and professional programmes available, many fear that "not studying means falling behind" and therefore opt to enhance their credentials first. Others, lacking confidence amid rising employer demands, are reluctant to accept low-paying or uncertain jobs and turn to further study as a competitive strategy.

Wong observed that some young people in his caseload openly admit they do not want to enter the workforce too quickly, citing the demanding nature of work, and choose to continue studying instead. He noted that whenever employment conditions worsen, the number of young people pursuing further education tends to rise in tandem.

Beyond Credentials: Attitude and Communication

When asked whether higher qualifications always translate into stronger job prospects, Chu offered a nuanced view: it depends on whether the position actually requires that level of education. Many roles do not demand advanced degrees, and employers may worry that overqualified candidates will be less stable. She described academic qualifications as a basic "entry ticket" — but when candidates have similar educational backgrounds, attitude, communication skills, understanding of the role, and interview performance often become the deciding factors.

Wong noted that the current market primarily offers positions for secondary school, sub-degree, and bachelor's degree holders, with no significant growth in roles requiring master's degrees or above. "Even if you complete a master's degree, the positions you ultimately apply for mostly require only a bachelor's degree," he said. "That extra competitiveness may not translate into an advantage in the job market."

The Hidden Human Cost: Psychological and Social Fallout

Organisations helping young people find work are increasingly concerned about the psychological and social toll of prolonged unemployment. Wong warned that youth who fail to find work for six to eighteen months may begin to lose confidence, doubt their abilities, and even develop social withdrawal. Beyond eighteen months, repeated failure can lead to "learned helplessness" — a state in which young people simply give up trying to find work. "In the long run, this will inevitably become a burden on the government or society," he cautioned.

Chu urged the public to stop labelling unemployed or out-of-school youth as "NEETs," arguing that the term has become associated with negative stereotypes such as "lazy" or "unable to endure hardship," unfairly blaming individuals for what is a complex structural issue. When society places blame on young people, she explained, they may feel intense shame, resign themselves to their circumstances, and gradually drift away from the job market and society altogether. She advised parents to let go of rigid expectations about job titles, offer encouragement and companionship instead, and seek help from the various employment support programmes available.