(This essay was published in Hong Kong Economic Journal on 3 May 2017.)


The recent report on Science, Technology and Mathematics Education (or the Tsui Lap Chee Report) issued by the Academy of Sciences of Hong Kong finds our secondary school curriculum and university admissions criteria have led to the underemphasis of science education in the schools and that this will hamper the development of the innovation and technology ecosystem of Hong Kong.


Another education failure, not the subject of the Tsui Report, is the underinvestment in education for at least two decades in both senior secondary and higher education. This underinvestment is the leading cause of our lackluster economic performance in the past two decades. The underemphasis of science education in particular will negatively impact our economic future. Both of these failures should be corrected at the same time.


The new economy that has emerged in the US over the past four decades has created jobs that require more and more workers to have a solid foundation in scientific knowledge and skills. Broad exposure to science and mathematics in secondary school is essential if students are to benefit from subsequent learning at higher levels.


The undersupply of skilled tertiary-educated university graduates in the US explains in large part why inequality in wages is growing among its working population. The oversupply of humanities graduates relative to science, technology, engineering and mathematics (or STEM) graduates has worsened the shortage of relevant skilled manpower in the new economy.


The skills shortage in the US labor market has been a drag on US economic productivity and growth. Although the US unemployment rate in March 2017 among the working population is 4.5 per cent, another 5.2 percent of its labor force is out of work on disability pay and is unemployable.


Unemployment in Hong Kong is low because of the exceedingly tight labor market conditions. Our labor force, especially our young labor force, has been growing very slowly for over three decades due to population ageing and political resistance to importing more skilled workers and attracting skilled immigrants.


The Gobi Desert Narrative


Domestic and foreign investments are attracted to localities where they can recruit the necessary skilled manpower. If such manpower is lacking, then it is necessary to attempt to attract skilled workers from elsewhere to that locality.


Israel became a new innovative technology economy in the last two decades after receiving a massive influx of scientific and technological migrants. Soviet and East European Jews arrived after the collapse of the Soviet Union, when they were permitted to leave the country. They became the new human capital behind the new economy. Hong Kong’s economic miracle in the 1960s was similarly enabled by an equally massive influx of entrepreneurial talent from the Mainland during 1945-51 trying to escape from the civil war and subsequent communist victory.


The spectacular growth of Shenzhen as a technology and innovation center has been its ability to attract vast numbers of young science and technology graduates from all over China and subsequently also from overseas. Its appeal lay in its status as the first special economic zone and its proximity to Hong Kong.


For a small open economy like Hong Kong, an abundance of STEM graduates is an absolutely necessary condition for attracting business investments in the new innovative technology economy. Many commentators and even economists have blamed our failure to develop new innovative and technology industries on the government’s misguided belief in positive non-interventionism.


Much of this criticism is ideologically motivated rather than evidence based. It is not obvious that facilitating institutions and a pro-active policy to correct market failures and capital market imperfections, and to provide preferential tax treatments and land subvention advantages for innovative and technology industries, can compensate for the lack of skilled manpower. The latter is a prerequisite for attracting investments in the new economy.


I subscribe to what I call the ‘Gobi Desert’ narrative. Adopting the best institutions and policies in the middle of the Gobi Desert for an entire generation will not spawn new industries because no one is willing to go there to live. It will remain an empty desolate place regardless of what institutions and policies the government introduces.


Hong Kong under ‘one-country two-systems’ has jealously guarded its borders to prevent the inflow of outsiders, except for family reunion reasons. Singapore’s relative success in building new economy businesses has been its focused, single-minded commitment to an immigration policy to attract skilled manpower mostly from China. The role of preferential policy treatments and tax benefits are often exaggerated.


In Hong Kong, among the population aged 25-34 in 2011/12, only 34.7 per cent in 2011 had university degrees versus 49.3 per cent in Singapore in 2012. Among those aged 35-44, the corresponding figures were 24.8 per cent and 40.4 per cent. Is it at all surprising that Hong Kong has lagged behind Singapore in new economy activities given our inability to attract educated and skilled workers and our failure to invest in education?


Which Economic Future?


This does not mean that everyone will become a scientist, engineer or technologist. But it does mean more and more jobs will require workers to possess scientific and technological know-how. Workers in the new economy must possess an understanding of the fundamentals and principles of science and technology to engage in lifelong learning.


In the new economy most workers will still be manual workers, but they will also possess a science and technology background that enables them to read and comprehend technical reports, operate technical instruments, and acquire new knowledge and skills. Technologically competent and skilled workers will still be manual workers.


Consider the well-being, exercise and cosmetic services industries. These are becoming increasingly knowledge and technology intensive. Food and beverage will undergo a similar change as health and fitness conscience clients demand more nutrition and health-related information about what they eat and drink, and how to prepare food.


As medical knowledge advances, not only doctors but nurses as well will have to be familiar with an increasingly large body of knowledge. The medical and health care institutions will employ an increasingly larger proportion of scientifically and technologically trained support personnel. This requirement will arise in a large number of industries.


All kinds of businesses are expected to become science and technology intensive. The doomsday messages we often hear are that digital and information technology, artificial intelligence and robotics technology will displace workers. But this cannot be the complete message. These technologies will displace unskilled workers but they will also increase the demand for other workers. The displacement is what economists call the ‘substitution effect’ of a new technology.


There is also another effect that increases the demand for workers, what economists call the ‘income effect’. As the new technology increases income and wealth, there will be greater demand for all goods and services. The impact on employment will depend on the relative size of the substitution versus income effects.


It will also depend on the relative availability of skilled versus unskilled workers. If there are a lot of unskilled workers, there will be more unemployment and greater wage inequality between skilled and unskilled workers. If there are a lot of skilled workers, then fewer unskilled workers will be unemployed and wage inequality will be less.


Getting to the New Economy


To get to the new innovative and technology economy, the problem of a lack of human capital has to be resolved. Some combination of policies to accelerate investment in education and attract talent from abroad has to be found. The ageing of the population and the shortage of young workers mean that relying solely on education investments alone as a solution will not be enough.


At present most immigrants to Hong Kong from the Mainland arrive through two channels. The vast majority comes for family reunion and most of these are unskilled. A smaller group is skilled and well educated and they have found jobs after graduating as university students in Hong Kong or from overseas. Most of these are in business and finance rather than science and technology, with a small number of distinguished science and non-science scholars in the universities.


Government needs to redouble its efforts to attract workers with science and technology skills. There will be some barriers in terms of housing, jobs and visas. These challenges have to be faced. Jobs will come once businesses everywhere are confident that visa and housing issues can be adequately resolved. They will then be able to recruit skilled workers in and to Hong Kong.


On the education side, curriculum reform in the schools and university admissions criteria should be revisited. The Tsui Report has found that our secondary students fail to have a balanced introduction to STEM education.


Nearly half of senior secondary students have no exposure to a science subject. Students taking advanced mathematics have dropped from 23% in 2012, when the new Hong Kong Diploma of Secondary Education (HKDSE) was introduced, to 14% in 2016.


Moreover, over two-thirds of the students sitting the HKDSE examinations took only two electives due to overemphasis on the four core subjects – English, Chinese, Mathematics, and Liberal Studies. Before 2012, students took on average four elective subjects outside three core subjects. The dominance of the four HKDSE core subjects crowd out electives and effectively stream students away from science.


The Tsui Report recommends trimming the core subjects to achieve better balance between science and non-science subjects. It does not recommend which ones to trim. But it would be obvious that Liberal Studies should either be dropped or changed into a pass-fail subject. This would create room for more students to pursue a balanced choice of elective subjects between science and non-science subjects.


It also very sensibly recommends module flexibility for science subjects to cater for a range of aptitudes among students, and greater recognition of advanced mathematics to encourage its inclusion as a core subject. It also calls for universities to review their admissions criteria to redress the imbalance between core and elective subjects to achieve a better balance between science and non-science subjects.


Liberal Studies and Liberal Arts Education


For years, the choice of subjects has been tyrannized by the rigidities of maintaining a large core of subjects including Liberal Studies. Its inclusion might have stemmed from noble intentions to train critical thinking in school age children. But the skills learned in Liberal Studies are more compatible with non-science than science electives.


Given the realities of competition for scarce heavily-subsidized university places. the large majority of students, especially those with self-doubt about their aptitudes and learning habits, have chosen non-science subjects in a bid to improve their public examination scores to get into the universities. The attitudes of their parents and even the schools have often strengthened that tendency.


Liberal Studies is also often mistaken for a ‘liberal arts’ education, which it is not. The latter is a conception of university education that covers a balance of humanities, social and natural science subjects, which in classical antiquity were considered essential for a free person. It generally refers to studies not relating to professional, vocational or technical education. In this sense, dropping the Liberal Studies subject from the core will better prepare students that wish to pursue a ‘liberal arts’ education.


The ideal of a liberal arts education is best exemplified in the US higher education model, where many professional subjects are offered at the postgraduate level. It is believed that young college student minds are best encouraged to remain flexible and nimble so that they can embrace and engage with the full range of human knowledge and that this will put them in an ideal position to become leaders of the public and captains of industries. But in any society, not everyone is a leader or a captain.


An egalitarian dimension of the ‘liberal arts’ education ideal is to empower citizens in an open and equal society by making them free through education. In practice, empowerment must also include getting a job or vocation suitable to each citizen’s temperament and talents. Education fails if it is unable to fulfill this goal. A person without work cannot be empowered in any society – past, present or future.



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