08/04/2020
- Most of the relief fund earmarked to subsidise employees’ wages in affected industries
- Lam and ministers slash their salaries following controversy over chief executive’s pay
Many businesses have been forced to close because of the coronavirus outbreak. Photo: Winson Wong
More than 1 million Hong Kong workers will have part of their wages paid for by the government under a HK$137.5 billion package of measures to help businesses and residents struggling during the Covid-19 crisis, while the city’s leader and her ministers have vowed to take a pay cut, the Post has learned.
Revealing the massive relief fund on Wednesday, Chief Executive Carrie Lam Cheng Yuet-ngor said HK$80 billion would go towards the wage scheme, targeting coronavirus-hit industries over six months with individual payments capped at 50 per cent of salaries, up to HK$9,000 a month. The employers receiving the lifeline must pledge not to lay off workers, she added.
Hong Kong records 25 new cases, including two-month-old baby; tally at 960
Lam said the package, together with other recent pledges of financial relief, would cost a total of HK$287.5 billion, causing the budget deficit to surge from HK$139.1 billion this financial year to HK$276.6 billion, which is equivalent to 9.5 per cent of gross domestic product.
The relief deal is equivalent in size to 4.6 per cent of the city’s GDP.
Meanwhile, Lam’s monthly salary will fall to HK$390,000 after rising to HK$434,000 last July.
Lam and her 16 ministers had voluntarily agreed to a 10 per cent pay reduction for a year, the chief executive told the press conference.
The HK$137.5 billion deal – which was given the green light by her Executive Council earlier in the day – aims to safeguard employment and ease the woes of businesses, with the number of confirmed Covid-19 cases in the city reaching 960 on Wednesday.
A source said: “The scheme is aimed at coping with the economic hardship brought by the pandemic in the next six months. More than 1 million employees from various sectors, on top of those directly affected by the government’s social-distancing measures, will benefit.”
Staff affected by the latest social-distancing rules – including businesses forced to close – will benefit from the wage scheme, along with employees in sectors such as tourism and construction, two other sources said.
Some businesses set to benefit would be those related to education, such as tutorial centres, school bus operators and PE coaches contracted from outside, according to one.
In February, the government
unveiled a HK$30 billion fund that included 24 initiatives to help struggling sectors.
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“The government is drawing reference from the British government’s recent practice of paying 80 per cent of salaries of employees in affected industries, although the percentage and cap are lower in Hong Kong,” one source said.
In an unprecedented step announced last month, the UK government said the state would pay grants covering up to 80 per cent of salaries if companies kept workers on the payroll rather than laying them off.
In Singapore, the government has offered to pay 75 per cent of workers’ April wages, capped at S$4,600 (HK$25,000) per person.
The Japanese government on Tuesday approved its largest-ever economic relief package, which includes grants of up to 2 million yen (US$18,350), for small and medium-sized businesses whose revenues had more than halved.
Hongkonger recalls weeks of lockdown in Wuhan, China, the first epicentre of the Covid-19 pandemic
With the Hong Kong government sitting on reserves of more than HK$1.1 trillion, the Professional Commons think tank said the authorities should spend HK$200 billion on businesses and workers, including handing HK$7,500 a month over six months to sacked staff and covering 80 per cent of salaries up to a monthly maximum of HK$25,000 for workers at struggling firms and the self-employed.
Source: SCMP
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22/02/2020
- Dips in tourism, consumer spending could reduce first-quarter growth by three or four percentage points, according to Zhu Min, a former deputy managing director of the International Monetary Fund
- Massive effort now needed to help country rebound, economist says
The coronavirus outbreak in China sparked a huge dip in consumer spending. Photo: EPA-EFE
The deadly
coronavirus outbreak may have cost China more than 1.3 trillion yuan (US$185 billion) in the first two months of the year because of huge dips in consumer spending and tourism, according to a former senior executive with the
Zhu Min, who was deputy managing director of the IMF from 2011 to 2016, said during an online presentation on Saturday that the Covid-19 epidemic was likely to have cost the tourism industry about 900 billion yuan in January and February compared with last year, while consumer spending on food and drink was likely to have fallen by about 420 billion yuan.
While online spending – particularly on education and entertainment services – would offset some of the losses, the total drain on the economy over the period could be as much as 1.38 trillion yuan, said Zhu, who is currently head of the National Financial Research Institute at Tsinghua University in Beijing, which organised the presentation.
Based on figures from China’s National Bureau of Statistics, that would represent about 3.3 per cent of the country’s total retail sales in 2019.
Zhu Min says the Covid-19 epidemic cost China’s tourism industry about 900 billion yuan in January and February. Photo: AFP
“The falling consumption in the first quarter could knock down growth by three or four percentage points,” Zhu said. “We need a strong rebound, and that needs 10 times as much effort.”
Consumer spending is a cornerstone of the Chinese economy, accounting for almost 60 per cent of its growth last year. But with the coronavirus still far from contained, many local governments are reluctant to allow public facilities like cinemas and restaurants to reopen.
Despite the grim estimates provided by Zhu, his figures did not include car sales, which fell by 20.5 per cent year on year in January, their largest monthly dip in 15 years, according to figures from the China Passenger Car Association.
Sales in the first two weeks of February fell 92 per cent from the same period of 2019, mainly due to showroom closures. Over the whole of 2020, the coronavirus epidemic could cost China 1 million car sales, or about 5 per cent of its annual total, the industry group said.
In an effort to minimise that impact, Beijing has told local governments to introduce stimulus measures to boost car sales, including raising licence quotas in areas where numbers had previously been restricted to help fight air pollution.
Commerce ministry official Wang Bin said on Friday that the central government expected consumer spending to bottom out in March before rebounding in the second half of the year.
As for the economy as a whole, Chen Wenling, chief economist at the China Centre for International Economic Exchanges, a Beijing-based think tank, said this week that even if national production returned to 80 per cent by the end of February, first-quarter growth would still be less than 4.5 per cent. By comparison, China’s economy grew by 6.4 per cent in the first three months of 2019.
Economists from French bank Natixis forecast China’s gross domestic product to grow by between 2.5 and 4 per cent in the first quarter, depending on how quickly the situation was stabilised and the effectiveness of the government’s stimulus measures.
Source: SCMP
Posted in Beijing, China Centre for International Economic Exchanges, China’s economy, Consumer spending, COVID-19, ex-IMF official, International Monetary Fund, National Bureau of Statistics (NBS), National Financial Research Institute, Natixis, slash, Tourism, Tsinghua University, Uncategorized, US$185 billion |
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