One of Hong Kong’s biggest supermarket chains, Wellcome, will participate in the latest round of HK$81 billion (US$10.3 billion) wage subsidies, conceding to government demands to offer discounts in return, the Post has learned, even as the total number of applications for the scheme dropped significantly.
A total of 184,723 applications were made by Sunday’s deadline for the second instalment of the six-month Employment Support Scheme (ESS), the government announced on Monday.
According to people familiar with the application, Wellcome, which runs 331 stores around the city, had applied for the subsidy again after receiving HK$399 million in subsidies – together with its sister units – between June and August.
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The source said the firm was eligible for the scheme, and was negotiating with officials over the details of conditions imposed by the government on those returning to the programme.
In August, Chief Executive Carrie Lam Cheng Yuet-ngor had demanded two of the city’s biggest supermarket chains give discounts to customers to qualify for the government’s financial assistance, pointing out that supermarkets had seen their sales grow despite the overall slump in the retail sector amid the coronavirus pandemic.
The upcoming batch of wage subsidies will be rolled out between September and November. The scheme was launched before the city’s third wave of Covid-19 infections in early July, when social-distancing measures tightened, further straining the fragile economy.
Dairy Farm International – which operates supermarkets such as Wellcome, convenience stores such as 7-Eleven, the health and beauty retailer Mannings, and furniture giant Ikea – received HK$399 million in wage subsidies in the first round of public support.
Fellow supermarket chain ParknShop – part of AS Watson, and controlled by tycoon Li Ka-shing – collected HK$162 million in wage subsidies between June and August for at least 8,215 employees.
The Post has reached out to Wellcome and ParknShop for comments.
Meanwhile, without mentioning the ESS scheme, AS Watsons on Monday announced plans to boost its MoneyBack rewards scheme, which has over 3.7 million active users. Starting Wednesday, members using the app can redeem discounts by scanning QR codes at nearly 3,000 retail and catering outlets such as fast-food chains McDonald’s and Cafe de Coral, lingerie brand 6ixty8ight, and pet supplies store Q-Pets.
The group said it will also donate 1.8 million of its in-house locally made surgical masks called WatsMask WeCare.
Retail sector lawmaker Peter Shiu Ka-fai, said the wage subsidy was crucial for companies to cover staffing costs as they struggled to generate revenue.
“A lot of small to medium-sized companies are depending on the scheme in order to survive, especially as the third wave of coronavirus infections in July severely dampened business for retail companies,” Shiu said.
Hong Kong’s retail sales have fallen for 18 months straight, dropping 23.1 per cent in July year-on-year, according to the latest official data.
Among the latest round of applications, 158,337 were made by employers and 26,386 by self-employed persons. The number of applications was down almost 57 per cent from the first tranche, which saw 168,799 employers and 259,860 self-employed persons applied.
Carol Ng Man-yee, chairwoman of the Confederation of Trade Unions, said the drop in applications may signal that businesses had simply chosen to make staff redundant, or had stopped operating as the city’s economy worsened.
“Some of [the employers] have chosen to apply for the first round to obtain funding and then fire people because they have already decided not to retain staff even if the second round is offered,” Ng said.
Among the employers and self-employed persons taking part in the second round of the scheme, 90 per cent of them, or 143,000, had successfully applied and received funding in the first round between June and August.
That includes Hong Kong’s dominant free-to-air broadcaster Television Broadcasts Limited (TVB) which received over HK$ 85 million with a commitment headcount of 3,167 in the first round of the scheme. A spokeswoman for TVB said the company has applied for the second tranche wage subsidy, pledging 3,700 employees under payroll.
Some companies indicated they would not apply for the latest round of subsidies, including the city’s flag carrier Cathay Pacific and its sister airline Cathay Dragon. However, several of Cathay Pacific group’s major business units, such as HK Express, Air Hong Kong, Cargo Terminal, Hong Kong Airport Service and Cathay Pacific Catering Services, would be applying to the scheme.
Under the Employment Support Scheme, the government pays up to 50 per cent of employees’ salaries through their employers for six months, with the monthly subsidy for each worker capped at HK$9,000.
Hong Kong’s jobless rate was still at a 15-year high at 6.1 per cent in the rolling three-month period between May and July, even though the government’s wage subsidy cushioned the blow.
“We are confident that the second phase of the Employment Support Scheme will help to retain jobs, avoid large-scale layoffs and help the economy to recover quickly after the epidemic stabilises,” the government said in a statement.
The city’s economy – already in recession – contracted 9 per cent in the second quarter of this year, just short of the record 9.1 per cent year-on-year decline set earlier in the year.