Hong Kong could benefit from offshoring – but only if its government tackles the digital divide

The Hong Kong skyline, 2009. Image: WiNG/Wikimedia Commons.

“Offshoring” has been a big idea in international trade over the last few years – especially in the United States. That 40m Americans could lose their jobs to other countries should shocking not only to Americans, but also to government’s, like Hong Kong’s, for the largely missed economic opportunities it represents to the city’s poor.

Offshoring is the migration of jobs from (mostly) richer countries to (mostly) poorer countries. As industrialised economies have increasingly moved away from manufacturing, the offshoring debate has increasingly come to focus on services. Two factors behind this are rise of computerisation and telecommunications technologies like the internet, which enabled it; and the entry into the global economy of India and China, which benefited from it.

So what is offshorable? Alan Blinder, the former vice-chairman of the US Federal Reserve Board, makes a distinction between those impersonal services which can be delivered electronically with little to no degradation of quality, and so are tradable and potentially offshorable; and personal services which cannot be delivered electronically, or which suffer severe degradation of quality when delivered in such a way, and are hence non-tradable.

By this definition, keyboard data entry and manuscript editing are offshorable, but surgery is non-tradable. Writing computer code is also an impersonal service that can be delivered electronically with ease, while driving a taxi or lawyering in court cannot. It should be noted that what is offshorable is unrelated to whether the job is low- or high-skilled.

What distinguishes impersonal, or tradable, services from personal ones is that personal services require physical presence or face-to-face contact with end users. Typing services as well as financial security analysis are already being delivered electronically from India. Radiologists should be concerned for their jobs, although most doctors should not. While the police’s work generally isn’t offshorable, the work of security guards, consisting of monitoring cameras, may be.

Offshorable jobs are not, as some have suggested, necessarily confined to rule-based tasks: Blinder pointed out that many complex tasks that require refined skills and human intervention are routinely offshored, with the aid of telecommunication facilities. This includes statistical analysis, programming, editing, and security work.

Finally, what is personal and impersonal exists on a continuum. There are jobs that are obviously on opposite ends of the spectrum: data entry and child care, for example. But there are others in between, and while the job of an architect or professor can be delivered electronically over the internet or videoconferencing, the quality of their service degrades noticeably.

Are Hong Kong’s poor benefitting from offshoring? After all, offshoring is a large and disruptive force in the services sector. Since information and communications technology will continue to get better and cheaper, the scope for offshoring will increase substantially. As a developed economy, Hong Kong has a large services sector.

But Hong Kong’s digital divide will keep the poor from benefitting from offshoring. Some 98.9 per cent of Hong Kong residents with an income of $50,000 or more have a computer, compared to 72.2 per cent of those who make $10,000 to $19,999 and a meagre 37.9 per cent of those making less than $10,000.

Internet penetration in Hong Kong is among the highest in the world – 92.6 per cent of households have broadband connection and there are 51,914 public Wi-Fi access points in the city, according to this year’s figures. But again, the poor are under-represented. Only 69.3 per cent of residents in public rental housing own computers that are connected to any form of internet. By income, only 36.7 per cent of households with an income of under $10,000 own an internet-enabled computer. In families that make more than $50,000, the penetration rate is 98.6 per cent. Along the age divide, the elderly are also markedly less web-enabled, with only 37.4 per cent knowing how to use the Internet.

The question is whether these figures will prevent Hong Kong, and its urban poor, from benefitting from the offshoring craze. The census data does not give much information on mobile internet usage, although the functions on a cell phone that can be using for offshoring with a business partner overseas, as of now, are somewhat limited. So if Hong Kong is to benefit from offshored jobs, computers will be necessary. And Hong Kong’s urban poor, with their low rate of internet connectivity, will not benefit from the deluge of jobs that could theoretically move from the rich world. 

To change that, the city’s government needs to connect the poor to the internet and 3G and 4G mobile networks: that way, they can take advantage of traditional online methods of connectivity like social media and video telephony, as well as newer services like e-payment. This can be done through subsidies or through the creation of “internet labs” that complement government-organised career training centres and programs.

Plugged into the international economy with these electronic tools, the poor can solicit businesses from abroad in fields like typing, translation, and language tuition. The statistics, after all, shows that a large pool of labour is waiting to be used in an age of global offshoring.

Gary Lai was the founder and director for ten years of the anti-poverty campaign TKO Poverty.


America's cities can't police their way out of this crisis

Police deployed tear gas during anti-racism demonstrations in Los Angeles over the weekend. (Mario Tama/Getty Images)

As protesters took to the streets across the United States over the weekend to express their anger at police killings of unarmed black Americans, it was hard to miss the hypocrisy coming from local authorities – including the otherwise progressive, left-leaning officials who are in power in most major American cities. 

Many US mayors and their police chiefs had issued public statements over the past week that seemed – only briefly, as it turned out – to signal a meaningful shift in the extent to which the Black Lives Matters movement is being taken seriously by those who are in a position to enact reforms. 

The sheer depravity of the most recent high-profile killing had left little room for equivocation. George Floyd, 46, died last Monday under the knee of white Minneapolis police officer Derek Chauvin, while three additional officers helped to hold Floyd down, doing nothing to aid him as he begged for them to stop and eventually lost consciousness. The officers had been attempting to arrest Floyd on suspicion of having used a counterfeit $20 bill at a deli. All four have since been fired, and Chauvin was arrested Friday on charges of third-degree murder and second-degree manslaughter. 

“The lack of compassion, use of excessive force, or going beyond the scope of the law, doesn’t just tarnish our badge—it tears at the very fabric of race relations in this country,” Los Angeles Police Chief Michel Moore told the Washington Post in response to the Floyd case. Meanwhile Moore’s boss, Los Angeles Mayor Eric Garcetti, on Friday claimed that he understood why his city, which is no stranger to police brutality, was protesting. “We absolutely need as a nation, certainly as a city, to voice our outrage, it’s our patriotic duty to not only stand up for George Floyd but for everybody who has been killed unnecessarily, who’s been murdered for the structural racism that we have in our country,” Garcetti said. 

Normally, US police chiefs and mayors tend to ask citizens to withhold judgment on these types of cases until full investigations can be completed. But a 10-minute video recording of Floyd’s killing had made what happened plain. Police chiefs across the country – and even the nation’s largest police union, which is notorious for defending officer abuses – similarly condemned the actions of the Minneapolis officers, in a rare show of moral clarity that, combined with the arrest of Chauvin, offered at least a glimmer of hope that this time things might be different. 

As the events of the weekend have since shown, that glimmer was all too fleeting. 

In city after city over the past three days, US mayors and their police chiefs made a series of the same decisions – starting with the deployment of large, heavily armed riot units – that ultimately escalated violent confrontations between officers and protesters. Images widely shared on social media Saturday and Sunday nights made it clear that members of law enforcement were often initiating the worst of the violence, and appeared to treat protesters as enemy combatants, rather than citizens they were sworn to protect. 

In New York City, two police SUVs were seen plowing into a crowd of protesters, while elsewhere an officer was recorded pulling down a young protester’s coronavirus mask in order to pepper spray his face

In Louisville, the city where Breonna Taylor, a 26-year-old black woman was fatally shot by police on 13 March, state police in riot gear were captured confiscating and destroying protesters’ supplies

In Minneapolis, forces opened fire with nonlethal rounds on residential streets, much to the shock of homeowners standing on their own front porches. 

Images of police pushing or shoving peaceful protesters were almost too numerous to count, including, in Salt Lake City, an elderly man with a cane

In many places, police also targeted journalists who were covering the protests, firing at clearly identifiable media crews with rubber bullets, injuring and even arresting reporters

Some protesters did commit acts of vandalism and looting, and the leaders of cities where that happened generally responded in the same ways. 

First, they blamed “outside agitators” for the worst protester behaviour, a claim that harkens all the way back to the civil rights era and for which the evidence is murky at best

Next, they enacted sudden curfews with little to no warning, which gave law enforcement an excuse to make mass arrests, in some cases violently. 

In a pair of widely criticized moves, Garcetti of Los Angeles closed the city’s Covid-19 testing centers and suspended the entire mass transit system Saturday evening, stranding essential workers on their way home from daytime shifts. Late Sunday night in Chicago, the city’s public school system halted its free meal distribution service for low-income children, citing “the evolving nature of activity across the city”.  

Governors in at least 12 US states, in coordination with city leaders, have since called in National Guard troops to “help”. 

At this point it’s clear that the leaders of America’s cities are in desperate need of a radically different playbook to respond to these protests. A heavily armed, militarised response to long-simmering anger toward the heavily armed, militarised approach to American policing is more than ironic – it’s ineffective. Granting police officers wider latitude to make arrests via curfews also seems destined to increase the chances of precisely the tragic, racially biased outcomes to which the protesters are reacting. 

There are other options. In places such as Flint, Michigan, and Camden, New Jersey – both poor cities home to large black populations – local law enforcement officials chose to put down their weapons and march alongside protesters, rather than face off against them. In the case of Camden, that the city was able to avoid violent clashes is in no small part related to the fact that it took the drastic step of disbanding its former police department altogether several years ago, replacing it with an entirely new structure. 

America’s cities are in crisis, in more ways than one. It’s not a coincidence that the country has tipped into chaos following months of emotionally draining stay-at-home orders and job losses that now top 40 million. Low-income Americans of colour have borne a disproportionate share of the pandemic’s ravages, and public health officials are already worried about the potential for protests to become Covid-19 super-spreading events.

All of this has of course been spurred on by the US president, who in addition to calling Sunday for mayors and governors to “get tough” on protesters, has made emboldening white nationalists his signature. Notably, Trump didn’t call on officials to get tough on the heavily armed white protesters who stormed the Michigan Capitol building over coronavirus stay-at-home orders just a few weeks ago. 

US mayors and their police chiefs have publicly claimed that they do understand – agree with, even – the anger currently spilling out onto their streets. But as long as they continue to respond to that anger by deploying large numbers of armed and armored law enforcement personnel who do not actually live in the cities they serve, who appear to be more outraged by property damage and verbal insults than by the killings of black Americans at the hands of their peers, and who are enmeshed in a dangerously violent and racist policing culture that perceives itself to be the real victim, it is hard to see how this crisis will improve anytime soon. 

Sommer Mathis is the editor of CityMetric.