A Survey Report on the Situation of Hong Kong’s Apparel Retail Workers under the COVID-19 Pandemic and Response Strategy

Promoters and Casual Workers Union 
Hong Kong Women Workers’ Association
Edited and translated by: May Tam

December 2020

I. Foreword

The retail industry is one of the sectors suffering most from the hard hit of the COVID-19 pandemic. But for the retail of apparel brands in particular, statistics have indicated that its downturn actually began in 2019, since when those brands promoting “fast fashion” have one by one pulled out of the China and Hong Kong markets. The attack by the pandemic is only an accelerator for the industry’s further decline. The sector’s downturn together with challenges brought by the pandemic has been a big blow to the livelihood of its employees.  

This essay examines the situation of the Hong Kong’s apparel retail workers who have been doubly plagued by the pandemic and the downturn of the industry, and what strategies were adopted as response. For details, we will first look at the situation of the apparel retail sector before and during the pandemic, then the relief measures taken by the Hong Kong SAR Government to assist the sector, the employee’s remuneration under the pandemic revealed by a survey, and lastly there will be a summary-cum-analysis, together with recommendations on how to improve the workers’ welfare. 

II. Background

1. The sector already in decline before the pandemic

In 2020, a number of international garment brands announced their complete withdrawal from the Hong Kong market. They include Victoria’s Secret from the US, Topshop from the UK and ALAND from South Korea. There were brands (e.g. ESPRIT) closing all branch retail shops in Asia while some (e.g. GAP from the US) significantly scaling down the business in Hong Kong.

2. Some brands laying off employees despite business growth

The Hong Kong SAR Government statistics show that the unemployment rate of the retail industry in July - September 2020 was 9.3%, representing 27,700 persons unemployed.  Some brands laid off employees despite business growth. For instance, the US brand, Nike, which is a global supplier of apparel with a high turnover value, enjoyed a 7% of business growth in the first quarter of 2020 despite the pandemic. However, according to a news report of the Portland Business Journal, Nike had submitted a report to the State Government of the US, saying that it would sack about 700 workers from its branches around the world before 8^th January 2021. This number of employees to be laid off is 40% higher than the target number of 500 announced by the brand in July 2020. It was reported^[1] that the lay-off exercise would enable the brand to save a cost of USD200 -250 million.

3. Hong Kong’s retail industry and its labour conditions under the pandemic

The Report on Monthly Survey of Retail Sales^[2] published by the Census and Statistics Department of Hong Kong has noted that the value index of the retail sales for the category of “Clothing, footwear and allied products” during January - December 2020 recorded a year-on-year drop of 41.1%, with the wearing apparel reducing 41.3%, and footwear, allied products and other clothing accessories falling 39.7%. (See Table 1 of https://www.statistics.gov.hk/pub/B10800032020MM12B0100.pdf)

A survey done by The Hong Kong Retail Management Association reflected that most companies would adopt the “no-pay leave” measure to reduce cost, and needed to sack more than 10,000 workers in December 2020. According to the Hong Kong SAR Government statistics^[3], the unemployment rate of the retail industry in July – September 2020 stood at 9.3%, with 27,700 persons going jobless.

4. The government-launched Employment Support Scheme supports employers but not employees due to loopholes of the scheme, and a lack of supervision and penalty

In Hong Kong, there is no public assistance for unemployed people. When one encounters unemployment or underemployment, living on personal savings is the only way out. Although there is a scheme of Comprehensive Social Security Assistance run by the government, the threshold for application is too high and it also carries negative social labelling. Moreover, Hong Kong has no public pension schemes and hence lacks retirement protection. If one is compelled to retire due to unemployment, s/he could only live on his/her own savings (personal savings or the Mandatory Provident Fund^[4]) for livelihood. Workers would set to suffer the loss of livelihood upon unemployment under the pandemic. As there is no legally-protected collective bargaining, the bargaining power of workers is weak.

The government has launched the Employment Support Scheme as a relief measure, which subsidises employers to pay for employees’ salary. When an employer applies for the subsidies, s/he must pledge not to dismiss any employees and use the whole sum of subsidies to pay for employees’ salary. However in practice, many employers have used the subsidies on other purposes such as paying rent while there have been employees forced to take no-pay leave. As the scheme is without any mechanisms for supervision, penalty or complaints, workers find no way for filing complaints.

III. Survey on the situation of Hong Kong’s apparel retail workers under the pandemic

With support from the Clean Clothes Campaign, our Association has launched a scheme on training and survey.  The survey report is about the situation of apparel retail workers under the pandemic, together with advocacy of proposed policies.  Details of the survey and results are outlined below.

1. Objectives of the survey: Through conducting the survey, we made contacts with the workers and distributed to them information materials on labour rights, so that they could be supported upon emergence of labour disputes in the future. The survey also seeks to understand the working conditions of frontline workers and reveals the shortcomings and loopholes of the Employment Support Scheme launched by the government.

2. The survey methods: Online questionnaires were used. Researchers went to retail shops in person to contact retail workers, gave them information cards and explained the purpose of the visits, then invited them to scan the QR code printed on the information card to go online later to fill in the questionnaires. Focus groups and individual interviews were also conducted.

3. The survey period: May - October 2020

4. Brands involved in the survey: NIKE, Adidas, Uniqlo, K.Swiss, Fila, Converse, I.T., VAN, Calvin Kelvin, GAP, Puma, ASICS, Reebok, Levi’s, GU and etc.

5. Number of workers surveyed: There were 198 retail shops visited, with 900 workers having received the information cards. After visits, there were 174 workers filling in questionnaires online, representing a response rate of 19.3%. This is a not-bad rate as the workers surveyed had to take proactive actions to go online to answer the questionnaires.

6.   The survey results:

1. Each of the group of part-time workers and full-time workers constitutes a half of all being surveyed: 89 Part-time workers / temporary or casual workers (51%), 85 full-time workers (49%)
2. The work mode was mostly employment relationship which constitutes 72% (125 workers) of all surveyed, while the remaining work modes were in order no contractual relationship: 18% (31 workers); self-employed: 10% (18 workers).
3. Most being surveyed engaged in the work of sales-cum-sorting-and-tidying stocks who constitute 72% (125 workers). Other work types were in order sorting-and-tidying stocks: 14% (24 workers); sales-cum-cashier: 13% (22 workers); shop management: 2% (3 workers).  All these are frontline positions in a retail shop. 
4. Most were paid with basic salary-cum-individual commission, which constitutes 67% (116 workers). Other salary modes were in order the basic salary plus corporate commission and individual commission: 22% (38 workers); daily wage and monthly wage: 6% of each type (10 workers of each type). This indicates that the commission system is commonly practiced in the retail industry, and thus its employees face unstable income. The commissions are categorised into two types, namely corporate commission and individual commission. The individual commission is calculated on a worker’s own sales while corporate commission, which is counted on the basis of a retail outlet’s sales, will be divided among staff. Staff in some companies even share the corporate commission calculated on the total sales from all branch retail outlets within a district. Only when a percentage of sales has been reached, would the corporate commission be calculated. This practice imposes great pressure onto frontline workers due to the intense competition among workers, as a worker’s own sales performance could affect other’s income. This leads to staff monitoring and putting pressure on one another.
5. The number of monthly normal working days for individual workers were mostly 16-23 days, which constitutes 50% (88 workers). Other amounts of working days were in order 12-15 days (23%, 40 workers), less than 12 days (21%, 36 workers), and over 24 days (6%, 10 workers). Here we can see that nearly half (44%) of the workers surveyed had their normal working days less than 15 days. They were then in the category of part-time, temporary or causal workers who could not enjoy the statutory labour rights protection that only applies to employees working for four consecutive weeks, with 18 work hours per week.
6. Retail sales were severely dwarfed by the pandemic and thus workers got zero income in three ways which are in order the most common one of taking no-pay leave (40%, 141 person-times), taking annual leave in advance (16%, 57 person-times), temporary closure of business and thus suspension of work (12%, 41 person-times). There were other work arrangements including staff being deployed to work at other retail outlets in other districts (21%, 76 person-times) and reduction of daily work hours (8%, 28 person-times).
7. The pandemic has led to a massive scale of manpower reduction in retail shops, with 67% of retail shops involved in the survey got a drop of 30-40% of staff. Those shops with a decrease of a half or more staff also constitute 16% of all shops surveyed.
8. There was 60% of the workers surveyed knew that their companies had applied for the subsidies granted by the government’s Employment Support Scheme to pay for staff salary.  However, as the scheme lacks supervision and complaint channels, workers find no way to claim justice even if they know their company having applied for the scheme but did not use the subsidies on their salary.

IV. Summary and analysis

1. As the survey started with visits to retail shops, so researchers could not make contacts with those workers already sacked or had their work suspended prior to the survey, and thus we did not know whether compensations these workers received were reasonable or not. However, it is certain that finding another job would not be easy. Workers being surveyed had to go proactively online to fill in the questionnaires, and there were plenty of them did not answer the questionnaires as promised. Thus the number of returned questionnaires was quite limited.

2. Forty percent of workers being surveyed engaged in part-time, temporary or casual jobs. Under the pandemic, many employees were forced to take no-pay leave or took fewer work hours. Full-time workers are now facing more and more unstable job security or have turned to be temporary or casual workers. It is expected that online sales and employing temporary or casual workers will become a future trend, which could further undermine employees’ bargaining power.     

3. The Employment Support Scheme launched by the government lacks mechanisms for supervision, penalty and complaints, and thus has failed to protect the rights of employees, but rather has encouraged irresponsible behaviours of employers. Some workers surveyed knew that their employers had applied for subsidies from the scheme but they were still told to take no-pay leave while there are no channels for complaints.

4. The pandemic has intensified the retail sector’s trend of employing temporary and casual workers, which makes protection of workers’ rights more difficult. 

5. The commission system adopted in the retail industry imposes pressure onto the frontline workers through the company’s multi-level hierarchy. The corporate commission could even divide staff because under this system, an individual worker’s sales performance would affect the income share of other colleagues.

V. Recommendations

1. The government should further issue subsidies, like that from the Employment Support Scheme, directly to the workers affected by the pandemic.

2. The government should provide “unemployment assistance” to workers who have suffered the impact of the pandemic or the economic downturn.

3. Protection of temporary or casual workers’ rights should be enshrined in the law.