Large supermarkets and pharmacy chains, as well as other businesses “unaffected” by Hong Kong’s fifth-wave Covid-19 outbreak, will be excluded from the next round of government wage subsidies, Chief Executive Carrie Lam has announced.
During Lam’s near-daily Covid-19 press briefing on Friday morning, she said the government planned to roll out a new round of financial support to local employers under the Employment Support Scheme (ESS) to “support businesses, safeguard employment and raise [people’s] confidence” amid the city’s worst coronavirus outbreak and surging unemployment rate.
The scheme, which launched in 2020, provided employers with subsidies to help them retain staff who might otherwise have been made redundant during the first year of the pandemic. The biggest recipients of were some of the city’s largest companies, including Dairy Farm Company Limited, Kowloon Motor Bus Company, and HKT Services.
On Friday, Lam said “the monthly subsidy amount for each full-time employee is set at HK$8000,” adding that the scheme will cover the three-month period between May and July and benefit up to 1.3 million workers.
Lam said a number of changes would be introduced to the new round of ESS, drawing on what was learned during the scheme’s first round in 2020. This time, handouts would be “targeted” towards industries directly or indirectly affected by the fifth-wave outbreak, “especially small and medium businesses,” Lam said. Industries “unaffected” by the fifth Covid-19 wave will be excluded.
According to a statement released after Lam’s briefing, any supermarket and pharmacy chain, property management company, bank, financial institution, delivery business, telecommunications firm, private hospital and land developer that employs more than 50 staff will be be excluded from the support scheme.
Previously, only public and statuary institutions such as the Airport Authority Hong Kong and the MTR Corporation, government-subsidized universities and social welfare organisations, as well as civil servants, were omitted. Lam said this was “loose.”
Lam said the upcoming handout would come with a ceiling on the receiver’s salary, and those earning more than HK$30,000 per month would not be able to benefit.
During the previous round, Lam said she had heard of employers distributing the subsidies to higher-earning employees rather than giving the full amount to low-salaried staff.
Businesses that receive the handouts would only be able to spend them on wages, and not reallocate the amount to cover other expenses, Lam added.
Lam said the government was also deliberating application methods for employers of staff aged over 65, as they are no longer in possession of MPF accounts.
However, Lam said the information she announced on the ESS was “still a framework.” She would be hearing opinions from commercial chambers, employer groups and unions, and said she hoped applications could open in April.
Past handouts to large conglomerates
During the first round of ESS, the government disbursed HK$90.2 billion to businesses, with the city’s largest corporations among the scheme’s top beneficiaries.
Topping the list was Dairy Farm Company Limited, which gained nearly HK$800 million from the government subsidies. The company owns some of Hong Kong’s largest chains, including supermarket chain Wellcome, pharmacy chain Mannings, convenience store franchise 7-Eleven and furniture franchise IKEA.
Activist investor David Webb said the handout scheme was “misconceived” and ended up being government “largesse” to corporations. Billions went to businesses that had “no plans to fire people” because they were unaffected or even performed better during the pandemic, such as supermarkets, he told HKFP.
“It would only be fair to compensate businesses ordered to shut down by the government” in a furlough scheme, which would have costed a fraction of the ESS, he said.
As of Thursday, the city has reported 996,862 Covid-19 cases and 5,136 deaths since the beginning of the pandemic.