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Wednesday, Oct 28, 2020

Bankers leaving Hong Kong face grim job markets, high taxes in migration options

Bankers leaving Hong Kong face grim job markets, high taxes in migration options

Hard-earned skills, languages and contacts that helped bankers thrive in the Asian finance hub will not all travel. Preferred destinations like Canada, Australia and the UK impose taxes that are three times higher than in the city

After several years weighing the pros and cons of leaving Hong Kong, Ms Lee is taking the plunge and moving to Canada. Though she has no job lined up, faces higher taxes and will have to endure harsh winters for the first time, she is willing to risk it.

“Am I worried about my job prospects in Canada? Of course I’m worried,” said the compliance officer at a major global financial firm who asked that her first name not be used. “The economy isn’t great and firms are freezing headcount. I can say this is probably the worst time to migrate.”

As China strengthens its hold on Hong Kong with a new security law, residents considering an escape are coming to grips with the sacrifices they will face. With the global economy enmeshed in the worst recession in almost a century, jobs are hard to find and countries are tightening borders.

Hard-earned skills, languages and contacts that helped them thrive in the Asian finance hub will not all travel. And preferred destinations like Canada, Australia and the UK impose taxes that are three times higher.

“Just because you were successful in Hong Kong doing a certain job does not mean that there’s going to be an appetite for your skill set or experience in another country,” said John Mullally, regional director at Robert Walters Plc, who handles financial sector recruitment for Southern China and Hong Kong. “It’s probably one of the worst times in our living history to be rocking up in a new country and expecting to land a job.”

The challenges aren’t deterring people like Lee. She is already bought a house in Toronto and plans to move in October, forgoing a job paying more than HK$1 million ($130,000) a year. Lee, in her 30s, and her husband first applied for a visa in 2014 as a back-up plan in case things got worse. In her view it has, with the security law becoming the last straw.

“We have lost any optimism toward the Hong Kong government,” she said, convinced that the finance hub will become just another Chinese city with curbs on free speech and censored television. “We do not want to stay here any longer.”

Even with the risks that come with relocation – especially in the middle of a global pandemic – recruiters are seeing an uptick in demand. Two years ago, about 80% of job-hunters who came to see Mullally were looking for work in Hong Kong. Now about half of them are seeking work abroad, driven by the security measures along with dwindling job prospects in a city embroiled in a deep recession of its own.

“The message they gave me is they just do not feel that Hong Kong for them is long-term the best option from a career and earnings perspective,” Mullally said.

While Hong Kong does not publish immigration statistics, applications for good citizenship cards – which certify a person does not have a criminal record – serve as a proxy because they’re often needed to apply for foreign visas. The monthly number of applications averaged 2,935 from June 2019 to April 2020, a 50% jump versus 2018.

Yet with unemployment rate in Canada at double digits and Australia close to that, émigrés like Sam recognise the job search will not be easy. The senior investment banker at a global firm is moving with his wife and two kids to Australia in three months.

Sam spent his teens in Australia, but has been in Hong Kong for 20 years, developing contacts that launched his banking career. He declined to reveal his salary, though investment bankers in Hong Kong are typically awarded bonuses that are 50% higher than in Sydney, Mullally said.

Senior private bankers meanwhile earn about 30% more in Hong Kong than in Australia, said Rick Chung, a Hong Kong-based recruiter for banking and finance at Randstad NV who is seeing about 10 to 15 finance people a week looking for jobs abroad.

Sam, 43, will have to start from scratch in Australia, and may have to switch careers. With the top marginal income tax rate of about 45% – versus 15% in Hong Kong – he’ll also have less money to spend.

“I left Australia many, many years ago and I don’t have any corporate contacts there so it’d be hard for me to stay in investment banking,” said Sam, who did not want his last name published. “Taxes are so much higher in Australia so I don’t think I will be able to earn as much.”

A mid-level mergers and acquisitions banker named Leung is also considering a move – to London. Leung, 38, worked there for five years before coming back to Hong Kong a decade ago. Like Sam, he is looking for a better place to raise his three-year-old son. Leung does not hold UK citizenship but has a British National Overseas passport granted to Hong Kong residents before the colony was handed back to China in 1997.

Leung has no job lined up in London, where bankers typically earn about 15% more than in Hong Kong, but also pay triple the taxes. While housing in Hong Kong is among the most expensive in the world, London isn’t far behind.

“I don’t mind giving up what we have in Hong Kong to trade for a better future for my son,” said Leung, adding the hardest part will be leaving his parents behind. “I don’t mind starting all over again.”

Another investment banker at a US firm named Tang spent his teen years in Canada and has a passport allowing him to eventually retire there. For now, the 50-year-old prefers to stay put with his three kids for another few years.

“I have to say Hong Kong is still the financial Centre where bankers make the most take-home salary,” Tang said.

Lee meanwhile, is getting ready to head to Toronto in a few weeks, after winning a bidding war to buy a house in the city’s west end. Many friends may follow suit she says, while another colleague at her firm just quit to decamp to the UK
Edward Zhang, an agent with Dracco Pacific Realty in Vancouver, which markets high-end homes, said a friend just referred six friends from Hong Kong seeking properties in the Canadian city.

“So many around me are plotting to leave Hong Kong,” Lee said. “Honestly, who isn’t?”

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