Legislative Council Meeting Members’ Motions: Policy on unemployment loan

Policy on unemployment loan

MR CHAN CHUN-YING (in Cantonese):

Deputy President, the labour market in Hong Kong is still in a cold winter. I thank Mr POON Siu-ping for proposing the motion today so that we can discuss the relief measures for the currently unemployed. The COVID-19 epidemic is plaguing the whole world. According to a report released by the International Labour Organization (“ILO”) in December last year, the epidemic has wiped out 81 million jobs in Asia Pacific in 2020. Various countries have provided emergency unemployment assistance to the unemployed. The Singaporean government, for example, introduced the Covid-19 Support Grant and the Covid-19 Recovery Grant in 2020 and 2021 respectively to provide assistance to unemployed nationals aged 21 or above over a period of three months. The amount of monthly assistance provided this year is S$700 (approximately HK$3,940), which is equivalent to 15% of their median monthly employment earnings.

Hong Kong is actually facing the same employment hardship. In 2019, the unemployment rate in Hong Kong for the whole year was only 2.9%. However, the unemployment rate for the period between December last year and February this year reached 7.2%, with 260 000 people being unemployed. According to the latest figures released by the Census and Statistics Department, the seasonally adjusted unemployment rate for the period from February to April this year stood at 6.4%, with 247 500 people being unemployed. The unemployment rate of the food services sector reached a high of 12.1%. In view of the critical situation in the hard-hit industries, many Honourable colleagues of the Legislative Council have urged the Government to provide assistance to the unemployed. However, the Government held that a temporary unemployment assistance would overlap with the existing measures as the unemployed can apply for the Comprehensive Social Security Assistance (“CSSA”) Scheme, and measures such as the Employment Support Scheme are in place to help people tide over the difficult times.

Yet, the following figures may give us some insights. According to the statistics of the Social Welfare Department, unemployment CSSA cases in April amounted to 19 801, and as I mentioned earlier, the number of unemployed people for the period from February to April this year was some 240 000. In other words, less than 10% of the unemployed applied for CSSA. The relatively low number of CSSA applicants is probably because of the high application threshold. For example, one of the criteria for CSSA application is that the household asset must not exceed a specific limit. The limit for single persons is $33,000, while that for two-person families is $44,000. For the currently unemployed who used to hold middle-ranking positions and have some savings, these requirements are hard to meet. Despite relaxing the asset limits by 100% last year, a large number of people can hardly benefit from it still.

In response to the financial difficulties arising from unemployment, Paul CHAN, the Financial Secretary, promptly introduced the 100% Personal Loan Guarantee Scheme (“the loan scheme”) in this year’s Budget. The loan scheme provides cash flow to those who have lost their jobs during the COVID-19 epidemic. Although the maximum loan amount is $80,000 only, the loan scheme can still give the unemployed a breathing spell. The annualized percentage rate of the loan scheme is 1% and the maximum repayment period is six years. Applicants, in effect, do not have to pay any interest if repayments are made on time. In other words, if applicants return to the labour market after taking out a loan, repayments will not be a heavy financial burden to them and the original intent of relieving their financial pressure can be achieved.

Nevertheless, the loan scheme will end at the end of October this year. The Secretary also pointed out in his blog last week that Hong Kong’s economy has been picking up its impetus and estimated that the unemployment rate will soon come down to the level nearly one year ago. However, there is still a huge gap to fill compared to the pre-epidemic period. We can imagine that unemployment will still plague Hong Kong for a while. Before the economy fully recovers or a long-term unemployment support scheme is formulated, I expect the Government to consider a sustained policy on unemployment loan, or at the very least, appropriately extend the existing loan scheme, so as to help relieve the pressure of living of the unemployed. Therefore, I support the motion proposed by Mr POON Siu-ping.

Deputy President, I so submit.