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©2003 Monetary Authority of Macau

The Nature of Unemployment in Macao and Its Policy Implications

Chan Sau San


Unemployment has been a major concern for Macao since 2000, when the unemployment rate reached a high of 7.1%, along with a resumption of the economy to positive growth. It has exhibited obvious stubbornness and poor responsiveness to strong economic growth in recent years, though the rate has stabilised at a slightly lower yet worrisome level of over 6%. Against the backdrop of this paradoxical phenomenon, this paper conducts a thorough analysis of available labour-market statistics with an objective to decipher the nature of unemployment in Macao. Our findings would serve as a solid foundation for a proper design of government policies to tackle the economic problem of great importance.

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1. An Overview of the Labour-Market Condition

In line with other exchange institutions of resources, the labour market in which individuals buy and sell labour services should perform the function to allocate workers to most efficient positions in various economic sectors. The price of labour, or the wage rate, is determined in the labour market according to the supply and demand conditions, and changes in the these conditions will facilitate adjustments in the labour market, reflecting in employment and wage. The labour market has a close relationship with the aggregate output level of an economy, as labour is an indispensable factor of production.

The quantity supplied of labour in an economy is constrained by its human resource endowment or labourforce. Population and labourforce participation rate fundamentally determine the size of labourforce. It is understandable that a significant number of the population is NOT ready for work, or technically speaking, economically active. In particular, children, students, homemakers, persons permanently incapable to work, retired persons and people lived on rental income and voluntary...