My Blog

Prompt relief measures to tide over hardships

20 September 2020

Deeply concerned about the pressure brought by the epidemic and the resultant economic downturn on local businesses and citizens, the Government has been deploying resources from the fiscal reserves to introduce support measures for businesses and individuals to alleviate their financial difficulties.

Waves of support measures coming in successively

The third round of the Anti-epidemic Fund (AEF) announced last Wednesday (September 16) focuses on subsidising sectors and individuals hard hit by the epidemic or directly affected by the Government’s anti-epidemic measures, in addition to further enhancing our capability in combating the epidemic. Involving a total commitment of about $24 billion, the four main prongs of AEF 3.0 are as follows¹:

• About $13 billion for enhancing our anti-epidemic capability, including procurement of vaccines, providing subvention to the Hospital Authority, operating quarantine facilities and subsidising the use of contactless payment in market stalls;
• about $4.5 billion for providing relief to sectors and individuals directly affected by the Government’s anti-epidemic measures, covering 23 sectors;
• about $6 billion for providing government rental and fee concessions/waivers and enhancing rates concessions; and
• enhancing the Special 100% Guarantee Product under the SME Financing Guarantee Scheme to help small and medium enterprises improve their cashflow.

In tandem with intermittent resurgence of the epidemic, the Government has introduced successive waves of support measures. The AEF 3.0 measures adopt a more focused approach to help precisely those sectors and individuals hardest hit by the epidemic.

Altogether, the AEF 1.0 and 2.0 measures, the 2020-21 Budget initiatives and the measures under AEF 3.0 just announced by the Government involve a total commitment of over $300 billion. The Government’s consolidated deficit for 2020-21 is also expected to increase to over $300 billion. Fiscal reserves will be reduced to around $800 billion, equivalent to around 12 to 13 months of government expenditure and close to the level after the SARS epidemic in 2003. The deficit figure is unprecedentedly high.

So far, 73 AEF measures were approved under the last two rounds, with a total commitment exceeding $145 billion. As at the end of last month, more than $78 billion of subsidy was disbursed, with more than 4.3 million individuals² and more than 450 000 enterprises/businesses benefitted. Out of the AEF 1.0 and 2.0 measures, 16 were completed. The remaining 57 measures, including the Employment Support Scheme (ESS), are ongoing and providing useful relief. Public resources are not unlimited and the Government has been doing it best to relieve people’s burden within its constraints. One should take an overall and objective view of the series of support measures introduced since the beginning of the year and evaluate them from a macro perspective.

While the third wave of the epidemic is not yet over, experts have spoken of a possible fourth wave of outbreak this coming winter. This, coupled with the woes and volatility of the external economic and geopolitical situation, means that the Government must strike a proper balance between preventing a rapid dwindling of fiscal reserves through prudent management of public finances on the one hand, and providing adequate support for affected businesses and individuals on the other.

Pulling together and putting the people first

Together with relevant Bureau Secretaries, I will attend a meeting of the Finance Committee of the Legislative Council (LegCo) this Friday (September 25) to field Members’ questions and solicit their support on the funding application for the relief measures. After obtaining the LegCo’s funding approval, the Government will implement the measures as soon as possible.

I fervently hope that, in view of the lingering epidemic and sustained economic hardships, all LegCo Members will adopt big-picture thinking and focus their minds on fighting the epidemic, stimulating the economy and improving people’s livelihood in partnership with the Government, avoiding unnecessary internal conflicts by putting the overall interests of Hong Kong above anything else.

Underemployment rate rising to a post-SARS high

Although the seasonally adjusted unemployment rate remained at 6.1% in the June-August period, i.e. unchanged from the May-July quarter, the underemployment rate increased by 0.3 percentage point to a post-SARS high of 3.8%. During the period, the unemployment rate in the consumption- and tourism-related sectors reached 10.9%, the highest since the onslaught of SARS; while the underemployment rate surged to 5.9%. The underemployment situation in many other sectors also deteriorated.

The third wave of the epidemic caused disruption to a wide range of economic activities in July and August, notwithstanding that the Government had rolled out the ESS to provide some support. The labour market remained austere in the June-August period. We expect the local epidemic situation to start easing in September, but with the pandemic still evolving worldwide and the global economy remaining weak, the local labour market may continue to experience some pressure in the near term.

Rollout of the second tranche of ESS

The Government has launched the ESS to provide time-limited financial support for employers to retain employees who may otherwise be made redundant. The second tranche of the ESS met with a positive response with 184 723 applications received (including 158 337 applications from employers and 26 386 applications from the self-employed). Last Wednesday, the first batch of 20 000 employers who will receive wage subsidies under the second tranche were notified of the application result, with subsidies totalling $7.2 billion and a total committed headcount of nearly 290 000 paid employees. We believe that the second tranche can further the objective of the ESS by retaining jobs and avoiding large-scale layoffs, thereby facilitating a swift economic recovery after the epidemic has stabilised.

Job creation measures to promote youth employment

To alleviate the grave unemployment situation and the plight of fresh graduates seeking employment, the Government has earmarked a sum of $6 billion under the AEF to create about 30 000 time-limited jobs in the public and private sectors in the coming two years. Many of these jobs in various industries are suitable for young people and fresh graduates and, despite being temporary in nature, will definitely be stepping stones for their future careers in related industries.

Undertaken by various bureaux and departments, the planning and recruitment work of these jobs is in full swing. As at the end of last month (August), the planning of around 23 500 jobs (including around 14 600 jobs in the Government and around 8 900 jobs in the non-governmental sector) has reached an advanced stage. Among them, around 4 900 jobs have been filled while the recruitment for around 9 800 jobs is ongoing. The planning and recruitment work of the remaining jobs will commence as soon as possible.

A few weeks ago, the Youth Development Commission (YDC) held a policy thematic meeting on youth employment via live webcast for government officials to explore with young people, employers, representatives of youth employment organisations and YDC members ways to further enhance support for youth employment. There was an in-depth and multi-perspective discussion on how to assist the young people in job seeking. The opportunity was also taken to buoy up those who had just graduated and were about to join the workplace.

I am very pleased to have personally listened to the valuable views of young people and other participants on the occasion, which will be conducive to enhancing the Government’s work. As a new attempt, the YDC held the first policy thematic meeting to gauge the thoughts of young people and feel their pulses more effectively, and to facilitate cross-bureau collaboration.

For instance, the Government will include more training and related elements of career development in the design of job positions under the job creation measures. I will invite the YDC to allocate additional resources to further enhance the Funding Scheme for Youth Life Planning Activities, with a view to providing secondary school graduates with more intensive, suitable and continuous personal counselling services. Besides, the YDC will make good use of the social media and online platforms to share practical information on youth employment, and will engage Youth Ambassadors in a thorough study on youth employment in order to gain a more comprehensive understanding of young people’s ideas on the subject.

Policy Address consultation launched

While everyone in Hong Kong is concerned about how the local economy can be revived and how employment can be improved amid the epidemic, the Government, being aware of public sentiments, is closely monitoring the situation to get prepared for economic recovery and future development. Following the commencement of the public consultation exercise for the 2020 Policy Address, the Chief Executive, Secretaries and Bureau Directors of the Government, including myself, have conducted online consultation sessions with stakeholders from different sectors over the past month. Also, members of the public are cordially invited to give their views on the 2020 Policy Address, so that we can formulate policy initiatives that best meet the needs of our society.

Hong Kong is a place of vitality with abundant opportunities. We have weathered numerous storms over the past decades. Although we are facing greater challenges today than ever before, our solid foundation and strong backing should stand us in good stead. With its unique dual advantages of “One Country, Two Systems”, Hong Kong will surely prosper again so long as the people stand shoulder to shoulder with the Government in riding out turbulent times and striving for continuous improvement.