HK$6 billion subsidy to help businesses as controversial MPF offset mechanism faces axe
Unionists slam measures to scrap controversial offset mechanism as ‘half measure’ while business sector could start using short-term contracts
A one-off subsidy of HK$6 billion will be offered to employers to alleviate financial pressure over a decade after they are no longer allowed to use the money they put into workers’ retirement funds to offset severance and long-service payments.
While Chief Executive Leung Chun-ying praised himself for showing determination to scrap the controversial Mandatory Provident Fund offsetting mechanism, unionists slammed it as a half measure and criticised him for watering down the formula that calculates severance and long-service payments.
At present, the payments are calculated by taking two-thirds of a person’s last monthly salary and multiplying it by the years of service. Under the new proposal, the two-thirds base will be lowered to half a month’s salary but the employee will also get to keep their entire MPF.
His plan also failed to pacify an angry business sector, as employers warned they could start hiring staff on short-term contracts to avoid making the two payments.
“We think that it is a feasible proposal, one that employers should accept and employees should find acceptable,” Leung said yesterday. “This proposal has considered the additional expenses incurred on the employers and so the government will be subsidising them. It is balanced.”