It’s time to strike a deal on MPF offset mechanism
Employers and unions must reach a compromise if Hong Kong is to move forward on this controversial issue regarding pension scheme
There can be no dispute that the controversial arrangement of allowing bosses to claw back their contributions into workers’ pension funds to cover severance and long-service payments must be abolished. The question is how to minimise the impact without compromising the interests of either workers or employers. After almost five years of waiting, Chief Executive Leung Chun-ying is finally trying to honour his campaign promise to abolish the much-criticised offsetting mechanism under the mandatory provident fund scheme.
To ease the resistance from business groups, the government plans to fork out HK$6 billion to partially subsidise severance and long-service payments on a sliding scale for up to 10 years. But bosses will still be required to pay an estimated of HK$111 million a year more initially, rising to more than HK$4 billion for the year after the subsidy expires. This will enable workers to keep the employers’ contribution to their MPF accounts in full, although the severance and long-service payments will be calculated on a less favourable basis.
It’s a reasonable trade-off, but the proposal has not been well received. Taxpayers question why they should subsidise what should be paid by bosses. Business leaders remain defiant and warned that it would add to costs and fuel massive layoffs. Unionists also criticised it as a half-hearted measure, saying the reduced severance and long-service payments were unjustified.
That the proposal has failed to please all stakeholders is hardly surprising. So antagonistic are the relations between employers and unionists that there was not much room for the government to broach the subject until now. With the clock for Leung to honour his promise ticking fast, the need for stakeholders to iron out their differences has become even stronger.
Compromise is inevitable. Now that Leung has taken the first step, it is incumbent upon the labour and business sectors to follow suit. Officials hope that there will be at least a consensus on the way forward within the current term. Hopefully, it will not become a hot potato for the next government.