- Some operators welcome any aid they can get, while others who feel funds are too small say they have been unfairly treated
- Key feature of relief package centres on move to cover half of workers’ salaries
Businesses in Hong Kong have hailed the government move to cover half of workers' monthly salaries as a much-needed lifeline from a HK$137.5 billion relief package rolled out to combat the coronavirus pandemic.
They said the wage subsidy " capped at HK$9,000 a month per staff member for six months " would bring significant savings, ease cash flow and help keep jobs as Covid-19 continued to ravage economies worldwide.
However, the administration's heavy spending, which will account for 9.5 per cent of the city's estimated gross domestic product (GDP), will eat into its HK$1.1 trillion fiscal reserves and prompt a record deficit of HK$276.6 billion in 2020-21.
Government to cover wages up to HK$9,000 a month from HK$138 billion virus fund
"This throws a lifeline to us, as we were left out on in the previous relief measures," Eric Ng Chi-chung, co-owner of one of the largest local food factories, said on Wednesday night. "The wage subsidy is very helpful at a time when our business has dropped 98 per cent every month since February."
I wish the government would have taken such actions soonerEric Ng, food factory co-owner
He said his company could save up to HK$4 million in labour costs over the six-month period for 780 staff members, who help operate 68 tuck shops at schools and supply lunchboxes to 80 schools.
Labour accounted for about 40 per cent of the company's total cost, followed by food and rent, Ng said.
He said he had tried not to lay off staff but instead asked them to go on unpaid leave for half a month since February when schools closed.
"I wish the government would have taken such actions sooner," he said. "I don't know what will happen in six months, I hope school will resume."
The education sector is among 16 business types eligible for one-off cash grants from the latest relief package aimed at protecting jobs and shoring up enterprises. This followed a HK$120 billion package announced in February.
Since late January, Hong Kong has been at a virtual standstill after the government rolled out social-distancing measures to contain the coronavirus. Apart from schools, a growing list of leisure venues, including gyms, cinemas, pubs, karaoke lounges, mahjong parlours, as well as beauty and massage parlours, have been told to shut down for 14 days.
These come on top of laws restricting gatherings of more than four people in public, and reducing the capacity at restaurants.
It eases part of the headache, but we still need rent cutsDavid Leung, Seafood Delight Group
David Leung Chi-wai, chairman of Chinese restaurant chain Seafood Delight Group, said the wage subsidy was handy for its 11 dim sum restaurants with 600 employees.
The chain paid HK$1 million in salaries a month, and he estimated the subsidy would save him roughly about a third of that amount.
"It eases part of the headache, but we still need rent cuts," Leung said, adding that rents and wages were his two biggest expenses. "There are many landlords who don't offer us lower rents."
He said sales of the group's restaurants plunged by as much as 80 per cent since the health crisis erupted in January.
What can HK$40,000 do? At best, it will be sufficient to cover restoring the interior of the education centres (before closing them down)Yam Wai-ho, Education Centres Union
The grants failed to placate operators in other sectors, however.
Yam Wai-ho, spokesman for Education Centres Union, an alliance in support of about 3,000 tutorial centres, blasted the HK$40,000 one-off grant to each business as an insult.
He pointed out that a gym, for instance, was qualified for a much bigger grant, at HK$100,000.
He said the group had surveyed some 300 education centres and their monthly rent on average stood at about HK$50,000.
"Many bosses are trying to sustain their operations and are waiting for the government's helping hand," he said. "I can tell you the wave of shutdowns will start. The help is so limited. What can HK$40,000 do? At best, it will be sufficient to cover restoring the interior of the education centres (before closing them down)."
Benjamin Yeung Ping-chiu, head coach at Overstep Table Tennis Training Centre, said the HK$7,500 one-off allowance for its instructors was minimal.
Yeung said they had to stop working for more than five months at least, and give up their monthly wages of at least HK$20,000 to HK$30,000 in this period. He said coaches should get more than HK$20,000.
Denzong Jung Lama, a director of an alcohol supply firm, urged officials to look into how to help food suppliers more.
Though his firm was eligible for the wage subsidy scheme, his industry did not get a one-off grant in two rounds of anti-epidemic funds.
"My liquid cash is stuck in stocks and my cash flow is so stretched out," he said. "If the government is not helping us but aiding everyone else. Then it's not fair."
Tam Wai-chiu from the Motor Transport Workers General Union welcomed the relief grant of HK$10,000 to school bus drivers and nannies, as well as the government's coverage of workers' wages.
"No one will think that's enough," Tam said. "But it's better than nothing."
He said the relief measures could at least help support drivers.
Financial Secretary Paul Chan Mo-po had said the spending was necessary though the government faced a record deficit.
ING Bank Greater China economist Iris Pang said such a bold move was needed, urging officials to act faster because businesses might not survive in two or three months.
She said the government was too optimistic to estimate that the HK$320 billion worth of relief packages since August last year could boost the city's GDP by 5 percentage points.
"For example, employees from 100 firms could benefit from the subsidies, but maybe 20 per cent of the companies will shut down in these two months," she said, referring to the period before the allowances were expected to be handed out.
"For this 20 per cent, you can't give money to them and it will be a negative factor in the GDP."
She predicted the city's GDP would drop 10 per cent year on year in the first quarter, while the annual contraction could hit 5.8 per cent, much worse than the government's earlier forecast of between 0.5 per cent growth and a 1.5 per cent contraction.
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