SHIRLEY ZHAO SHIRLEY.ZHAO@SCMP.COM
PUBLISHED : Thursday, 17 September, 2015, 7:00am
UPDATED : Thursday, 17 September, 2015, 7:00am
Secretary for Labour and Welfare Matthew Cheung at a radio programme in Wan Chai last month. Photo: SCMP Pictures
The government “has no inclinations” on whether the mandatory pension fund’s "offset mechanism" widely deemed unfair to employees should be scrapped, the labour and welfare minister said.
The comments yesterday by Secretary for Labour and Welfare Matthew Cheung Kin-chung came after media reports cited sources claiming Chief Executive Leung Chun-ying would in his policy address next year cancel the mechanism that allows employers to use their portion of Mandatory Provident Fund contributions to offset severance or long-service payments to employees.
Under the law, a company that fires a worker possessing more than five years of service must pay a long-service fee equal to the number of years of service multiplied by two-thirds of the employee’s monthly income up to HK$15,000 for each year, or a maximum of HK$390,000.
When Leung Chun-ying joined the chief executive race in 2012, his election manifesto included a line saying he would seek to lower the proportion of withdrawals by employers for the offset mechanism.
“I want to clarify that … the government is concerned about the problem of the MPF offset mechanism,” said Cheung after attending a Vocational Training Council event yesterday. “Both employers and employees are very concerned about this. The government is listening to opinions from many members of society … We have not had any inclinations on this problem.”
Cheung said the government understood that any change would be complicated and would likely affect employers and employees, especially small- and medium-sized businesses.
“We must balance between opinions from both sides and find a way that’s suitable for Hong Kong,” he said.
He did not comment on whether the government was sounding out public opinion through the media reports.
Pro-business lawmaker and honorary chairman of the Liberal Party James Tien Pei-chun said scrapping the mechanism would be controversial because employees would feel they would need to give employees two benefits or “double welfare” – MPF payment as well as long service fees when they separate. He said such a move might lead to employers cutting salaries. But he said he was not worried that it would lead to mass lay-offs because it would be “even more stupid” to pay out severance fees.
The Federation of Trade Unions’ lawmaker Wong Kwok-kin said it would be difficult for the government to scrap the mechanism.
“The business sector is standing firmly in terms of this issue,” he said, expressing “doubts” on whether cancelling the mechanism could be achieved.
http://m.scmp.com/news/hong-kong/economy/article/1858790/hong-kong-labour-secretary-non-committal-whether-government
