Almost 60 per cent of Hong Kong’s charity-focused businesses fear bankruptcy amid the fifth wave of Covid-19, according to a survey by an umbrella group that called for more support from the government to ride out the crisis.
The survey was released on Thursday by the Hong Kong General Chamber of Social Enterprises. Its chair Andy Ng said the closure of social enterprises was “not as simple as losing a business” but would be “a loss to Hong Kong” as a whole.
Vice-chair Chung Wai-shing said they surveyed 153 businesses across different sectors with 1,300 employees, accounting for around a quarter of the city’s social enterprises. The businesses were asked about the situation between January and February, when the city began seeing an exponential rise in cases fuelled by Omicron.
Around 95 per cent of respondents faced a drop in business while 45 per cent said their turnover had halved or fallen. Ten per cent of the companies surveyed had zero revenue during the period.
These were mainly in healthcare or education as their premises had to be closed due to government social-distancing policies, or there was no demand for their services due to the suspension of in-person school classes.
Chung said the fifth wave had also created difficulties for all social enterprises, including the shortage of raw materials, a rise in costs for disinfection services and medical supplies, an increased absence rate among staffers due to infection, and a drop in customers.
Between March 2021 and February 2022, Chung said seven per cent of their survey subjects had already gone out of business, while the figure was only three per cent the previous year.
Chung said most respondents had less than a year of cashflow and some could only keep their businesses going for less than three months.
As a result, Chung said 59 per cent of companies surveyed said they feared going bankrupt.
Disabled and vulnerable groups
Ng said social enterprises in Hong Kong are “bearing many social responsibilities and aims.”
Compared to the monetary investment, it was “more important” that these firms were hiring “quite many disadvantaged people or vulnerable groups” who could not easily find jobs in the open market.
Thomas Wong, founder of the social enterprise People on Board, said many people mistakenly believed that all social enterprises were financially supported by NGOs. In fact, many of them were small- to medium- sized businesses that “had to pay taxes while fulfilling their social objectives.”
Wong said his own business, which employed teenagers and women from low-income families, had only enough cash reserves for around three months of operations.
Peggy Ko, executive director of the Hong Kong Blind Union, said even when a social enterprise had a parent NGO, it would still be expected to balance its books. She said the parent NGO usually depends on donations and has to mainly devote its income to provide services. “The mother cannot feed [the baby] for very long.”
The union launched a social enterprise project last year, employing visually impaired people to operate a one-stop shop providing coffee and massage services. Ko said business boomed for six months, but the shop had to stop operations due to the social-distancing restrictions implemented since January.
Ng suggested the government provide three more months of wage subsidies under the Employment Support Scheme, create short-term job opportunities for the unemployed at social enterprises, designate five per cent of the upcoming HK$10,000 consumption voucher for spending at social enterprises and introduce more relevant subsidies.