THE business community has voiced strong opposition to the Old Age Pension Scheme proposed in a consultation paper issued yesterday. Under the scheme, it would be compulsory for every employer and employee to each contribute 1.5 per cent of the employee's salary to the common fund. That will be used to pay the monthly pension of $2,300 - to be annually adjusted for inflation - for each qualified person. While the contribution from the employer will be deducted from taxation, that from the employee will not. Expatriate employees, who may not stay permanently in the territory, will also have to contribute to the scheme. Employers expect the scheme to lower the competitiveness of the products made by Hong Kong industries, one employer said. Eddy Li Sau-hung, president of the China and Hong Kong Economic and Trade Association, said: ''Manufacturers will transfer to buyers the added labour costs of 1.5 per cent of employees' pay.'' Another problem for employers will be whether they should abandon their own provident funds in favour of the Old Age Pension Scheme or implement the two together. But many employers may find it technically difficult to abolish at once their provident funds because they are long-term projects. Mr Li's firm, Campell Timer, for instance, operates a provident fund into which both the employer and employee contribute five per cent of the employee's pay, to be refunded when the employee leaves the company. He said: ''We can't give up the old scheme. So we'll have to run both schemes at the same time. That means an employee should now surrender 6.5 per cent of his pay. ''And that 1.5 per cent going to the Government's pension scheme won't be refunded when the employee leaves the job. It'll affect employees' living standards.'' Also, the employer tends to reduce the size of his staff to make up for the increased labour costs. That would decrease labour demand in the market and put pressure on pay, Mr Li said. ''I've asked my staff for their opinion. Nobody is willing to cut another 1.5 per cent from his salary. It is, in fact, a salary tax rise in disguise.'' Business organisations have also rejected the scheme. Hong Kong General Chamber of Commerce chief economist Ian Perkin said the scheme would prove a costly burden on society. Apart from the Government's contribution of $10 billion as start-up costs, he said, the scheme was still extremely costly to the entire community. ''The scheme [to which all government resources now devoted to old age allowance will be transferred] requires far more substantial government subsidy than what has been provided [to the aged],'' he said. ''This can prove to be a costly burden on Hong Kong society in the longer term,'' he said. ''For those reasons, we continue to oppose the old age pension scheme,'' he said, adding the chamber preferred seeing an upgrade or revamp of old age allowance than the proposed scheme. Australian Chamber of Commerce chairman Philip Day said individuals should be given a choice in the type of pension schemes they would like to participate in. ''We much prefer a non-compulsory scheme whereby individuals can choose the old age pension scheme or private or independent schemes which many companies have for their employees.'' He said having a compulsory scheme was a step towards a welfare system rather than old age protection. ''We much prefer a non-compulsory scheme,'' he said. Some players in the financial field expected the problems of the proposed public pension scheme would eventually force the Government to scrap it. Bankers Trust manager Paul O'Donnell said although the proposed legislation was a move in the right direction the Government would eventually have to go the way of private funding. ''Every Western economy eventually finds it cannot afford its pension system and moves towards a self-funding system.'' While Hong Kong might be able to afford the scheme for the next few years, he said, it might not in one or two generations' time.