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Hong Kong’s next labour minister vows to ‘optimise’ plan to scrap contentious pension offset arrangement

Dr Law Chi-kwong says government proposal unlikely to be passed in current form

PUBLISHED : Tuesday, 27 June, 2017, 12:40pm
UPDATED : Tuesday, 27 June, 2017, 10:47pm

Hong Kong’s incoming labour minister Dr Law Chi-kwong pledged on Tuesday to improve the existing government plan to scrap a controversial pension fund arrangement, adding that the proposal was unlikely to be passed by the legislature in its current form.

The long-time University of Hong Kong academic said he would listen to views from both the labour and business sectors when making changes to the plan to abolish the Mandatory Provident Fund offsetting mechanism, which allows employers to dip into workers’ pensions for severance and long-service payments.

“We must help ease the pressure the employers will be facing,” Law said on a Commercial Radio programme.

The offsetting mechanism has for years put bosses and employees at odds. Last year, HK$3.85 billion was offset by employers – up a staggering 70 per cent from HK$2.27 billion in 2012.

Hong Kong business slams decision to scrap pension fund offset mechanism

Chief Executive Leung Chun-ying proposed scrapping the practice in his policy address in January. In view of the financial burden on employers, officials pledged a subsidy of HK$7.9 billion, to be used over 10 years.

But employers said the amount was not enough. The labour sector was also against the proposal because the government wanted to water down the formula that calculates the payments.

It appears that if no changes are made to the government’s proposal, the chance to see the proposal passed will not be high.
Dr Law Chi-kwong, incoming labour minister

Despite the opposition, Leung’s cabinet approved the proposal last week.

On Tuesday, Law said he would take that proposal and “optimise” it.

“To secure the Legislative Council’s approval, obviously we would need the support of different parties. From the attitudes (of the parties), it appears that if no changes are made to the government’s proposal, the chance to see the proposal passed will not be high,” he said.

“We need to understand that there are many micro, small and medium-sized enterprises in Hong Kong. They are facing very strong competition in the market. Any changes to their costs could challenge their operations in a big way.”

He remained tight-lipped on what sort of amendments he had in mind.

The Labour Advisory Board, a body consisting of labour and business sector representatives as well as officials, held a meeting on Tuesday to discuss the offset mechanism. But the government still failed to win the support of either side.

New thinking needed from Hong Kong’s next cabinet, top Beijing official says

Law, a founding member of the Democratic Party, was also asked for his views on Chinese President Xi Jinping’s visit to Hong Kong this week. Some pan-democratic lawmakers were invited to a dinner organised for the state leader.

The incoming minister declined to talk about the arrangements when asked if every lawmaker should be given a chance to attend.

“I do not wish to comment on the arrangements. But from the overall atmosphere in Hong Kong, it would always be better to unite more people,” he said.

Law confirmed that he had recently met Wang Guangya, director of the State Council’s Hong Kong and Macau Affairs Office. He declined to talk about what they discussed but said it would be beneficial for Beijing and Hong Kong officials to be in touch and exchange views. He said he did not think that the mainland authorities would be interfering in Hong Kong’s internal affairs by doing so.

Meanwhile, before attending his final Executive Council meeting on Tuesday, outgoing leader Leung declined to talk about the guest list for Xi’s dinner except to say that considerations had been made on multiple fronts.