Govt Concedes New Subsidy Won't Prevent Pay Cuts

The Secretary for Labour and Welfare, Law Chi-kwong, on Thursday admitted that the government’s plan to pay half of workers’ salaries due to the virus pandemic could not stop employers from cutting wages, reiterating that the main purpose of the subsidy is to save jobs.

Chief Executive Carrie Lam announced on Wednesday that the government will pay 50 percent of workers' salaries for six months, with the monthly subsidy for each worker capped at HK$9,000 -- half the city's median salary of HK$18,000.

Speaking on an RTHK programme, Law noted that many companies had already laid off staff, or asked workers to take pay cuts or no pay leave.

He said employers would be given flexibility to designate one of the months between January and April to be the basis on which the subsidy for that business will be calculated.

“Given the government’s subsidy, if the employer wants to let more staff resume work, he should pick January, when the business environment wasn’t as badly hit by the pandemic, as the designated month,” he said.

Law said there might be a scenario where a worker’s wage has already been cut, and the employer could be paying as little as 10 percent of the salary. He said in such situations, the government would still pay half of the worker’s original pay.

He said the situation now is different from 2003 when Hong Kong was hit by the Sars outbreak. He said in 2003, a lot of companies closed down quickly, but at the moment, many employers do not want to terminate their businesses and are instead asking staff to take no pay leave.

Law warned that it would definitely be a criminal offence if employers are dishonest regarding the subsidies.

“The principle is … we’ve given you some money. The money must go to the staff. If you didn’t give them the money, we can take it back,” he said.

“And we can consider what the punishment should be. We can check the businesses’ finances afterwards. If fraud is involved, it’s definitely a criminal issue,” he said.

The secretary said workers could report any violations on their employers' part to the government.

He said participating in the subsidy scheme does not mean employers cannot fire staff if they have performance problems. He said what should be looked at is the number of staff hired by a business, meaning they must not “downsize”.