Negotiations are under way with one major supermarket chain to offer discounts to shoppers as a new prerequisite for receiving pandemic-related government wage subsidies, the city’s welfare minister said.
While the city’s grocery giants have yet to disclose whether they are applying for the second instalment of the Employment Support Scheme (ESS), Secretary for Labour and Welfare Law Chi-Kwong said on a radio show on Thursday that one of the two supermarket chains singled out this week by city leader Carrie Lam Cheng Yuet-ngor is currently in discussions with the government to work out any teething issues with the plan.
Law did not specify which chain he was referring to, and the Post has reached out to both – Wellcome’s parent company, Dairy Farm, a part of Jardine Matheson, and ParknShop, a part of AS Watson controlled by tycoon Li Ka-shing’s CK Hutchison Holdings.
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Law insisted that requiring the city’s two largest supermarket chains to offer discounts would eventually benefit the general public, after the plan was criticised as a roundabout solution by welfare groups and lawmakers.
He did acknowledge, though, that the exact mechanism for determining the extent of the discounts is still in early stages of discussion.
“It would depend on what the supermarkets suggest,” he said. “It would be easier to monitor [the scheme] if supermarket chains offer to hand out food vouchers to NGOs and disadvantaged groups.”
When asked how the government would monitor whether supermarkets offered discounts at all, Law said the two retailers will have to cut prices “until we are satisfied,” but did not provide a figure.
He explained that discounted prices could be cross-checked against market prices tracked by the city’s Census and Statistics Department.
The discounts were first floated by Chief Executive Lam on Tuesday, when she told ParknShop and Wellcome to give back to society by cutting prices if they applied for the second instalment of pandemic relief.
The two retailers each pocketed more than HK$100 million in the first round of subsidies between June and August, despite the supermarket sector being one of the few to do well amid the pandemic.
In June, supermarket sales rose 4.5 per cent compared to last year, following similar rises of 7.3 per cent in May, 14.4 per cent in April, 16.1 per cent in March, and 11.1 per cent in February and January combined.
Under the Employment Support Scheme, the government pays up to 50 per cent of employees’ wages through their employers for six months, with the monthly subsidy for each worker capped at HK$9,000. The scheme was designed to help employers retain jobs as the Covid-19 pandemic devastated businesses.
Law acknowledged that the supermarket chains have faced price inflation of certain goods, but said the impact of the higher prices on business operations could not yet be determined as the companies were still preparing their financial statements.
He also reasoned that supermarket chains were relatively unscathed by the pandemic, and maintained that slashing prices for their goods would eventually benefit consumers.
“If [the two big market players] slash prices, other supermarket chains will follow suit,” Law said, adding that supermarkets could give back to society by passing on cheaper prices to consumers.
The anti-poverty NGO Society for Community Organisation (SoCO), which currently distributes food vouchers to about 1,000 households, welcomed any form of aid that could help the growing number of people struggling amid the coronavirus pandemic.
“If the supermarkets hands out food vouchers directly, then we would have to rely less on donations from individuals and companies,” said Sze Lai-shan, a community organiser at SoCO.
“Price cuts of grocery items would also help many people, especially those who we are unable to help at the moment, such as those who recently lost their jobs,” Sze said. “More people are trying to pinch pennies because of the recession.”