Legislative Council

LC Paper No. CB(2) 650/98-99
(These minutes have been
seen by the Administration)

Ref : CB2/PL/MP/1

LegCo Panel on Manpower

Minutes of meeting
held on Monday, 12 October 1998 at 3:15 pm
in Conference Room A of the Legislative Council Building

Members present:

Hon LEE Kai-ming (Chairman)
Hon LAU Chin-shek, JP (Deputy Chairman)
Hon Kenneth TING Woo-shou, JP
Hon HO Sai-chu, JP
Hon Michael HO Mun-ka
Hon LEE Cheuk-yan
Dr Hon LUI Ming-wah, JP
Hon Ronald ARCULLI, JP
Hon CHAN Yuen-han
Hon CHAN Wing-chan
Hon Andrew CHENG Kar-foo

Members attending :

Hon Emily LAU Wai-hing, JP
Hon CHOY So-yuk
Hon LAW Chi-kwong, JP

Members absent :

Hon David CHU Yu-lin

Hon James TIEN Pei-chun, JP
Hon CHAN Kwok-keung
Hon CHAN Kam-lam
Dr Hon LEONG Che-hung, JP
Hon LEUNG Yiu-chung
Hon SIN Chung-kai

Public Officers attending :

Mr Joseph W P WONG
Secretary for Education and Manpower

Mr Matthew K C CHEUNG
Deputy Secretary for Education and Manpower 1

Ms Esther LEUNG
Principal Assistant Secretary for Education and Manpower 4

Mr Herman CHO
Principal Assistant Secretary for Education and Manpower 7

Commissioner for Labour

Mr Alfred CHAN, JP
Deputy Commissioner for Labour (Labour Administration)

Deputy Commissioner for Labour
(Occupational Safety & Health)
Clerk in attendance :

Mrs Sharon TONG
Chief Assistant Secretary (2)1
Staff in attendance :

Mrs Justina LAM
Assistant Secretary General 2

Ms Lolita NG
Senior Assistant Secretary (2) 5

I. Briefing by the Secretary for Education and Manpower on the Chief Executive's Policy Address 1998

At the invitation of the Chairman, the Secretary for Education and Manpower (SEM) briefed members on the Bureau's major programme areas relating to employment, manpower training and retraining. His briefing notes were tabled at the meeting.

(Post-meeting note : SEM's briefing notes were circulated to absent members vide LC Paper No. CB(2) 414/98-99 dated 14 October 1998)

Easing unemployment

2. Mr CHAN Wing-chan expressed concern about the adequacy of measures to tackle the prevailing unemployment problem as little was covered in the Chief Executive's Policy Address or in the Bureau's programmes. SEM responded that the Administration was also very concerned about the problem and had been endeavouring to do its utmost to deal with the situation. Chaired by the Financial Secretary, the Task Force on Employment had introduced a series of 19 measures to tackle unemployment and create jobs. In this regard, the Labour Department(LD) managed to find jobs for about 17 000 people in the last quarter. Meanwhile, the Vocational Training Council (VTC) and the Employees Retraining Board (ERB) had increased their training capacity, resulting in an increase in the number of courses conducted. SEM further said that the rise in the unemployment rate reflected the current state of the economy. The Administration had been providing programmes and services to ease individuals' unemployment problem mainly by helping them to re-enter the workforce. However, substantial improvement to the prevailing unemployment situation in terms of a reduction in unemployment rate depended largely on economic recovery.

3. In response to Mr LAU Chin-shek, SEM advised that according to an estimate, there were a total of about three million employed persons in the labour market, representing a 3% increase compared with the figure for last year. However, the increase in employment had been outpaced by the increase in the labour force at the rate of 5.8%. The increase in the number of returnees and new arrivals from the Mainland in past years had an impact on the growth of the labour force. Given this and other possible factors such as employers' conscious effort to cut costs, the unemployment rate would remain high even though about 100 000 new jobs were expected to be available from mid-1998 to the end of 1999 largely as a result of Government's policy initiatives and investments. As regards the estimate of number of enterprises that would initiate retrenchment in the coming year, SEM said that the information was not readily available. He undertook to check with other bureaux to see if an estimate was available. Adm

4. Responding to Miss Emily LAU's concern, SEM said that despite the prevailing unemployment rate, some job vacancies such as pig farmers, personal care workers in private care and attention homes and workers in fish farm could not be filled at different points in time. The Commissioner for Labour (C for L) added that whilst job seekers were generally more willing to go for job interviews, there had been an increase in the number of job offers rejected by job seekers under the Labour Department's of Job Matching Programme. The main reasons given were dislike for the type and nature of work, the salary, working hours and remote work sites despite these being known to them prior to their attending the job interview. In other cases, job registrants might have found a job on their own.

As regards the question on financial assistance to the unemployed raised by Mr Andrew CHENG, SEM responded that the Administration was not prepared to introduce a special financial aid or insurance for the unemployed. Those unemployed persons with genuine financial hardship could apply for assistance under the Comprehensive Social Security Assistance Scheme.

Wage reduction by employers

5. On the issue of wage reduction, Mr SZETO Wah was of the view that instead of guidelines, legislation should be introduced to safeguard employees' interests. In response, C for L said that an employer should not impose wage reduction unilaterally without the employees' consent. She pointed out that employees had the right to choose whether or not to accept a wage reduction as proposed by their employers. If employees did not accept a wage reduction and were laid off subsequently, they were entitled to claim remedies from their employers such as severance pay in accordance with the Employment Ordinance.

6. C for L said that legislation was not the only solution to deal with the issue of wage reduction. LD was formulating practical guidelines for employers and employees to deal with wage reductions and retrenchments. The guidelines would stress the need for employers who were in financial difficulties to explore alternative measures to control costs, e.g. enhancing employees' productivity and that wage reduction and retrenchment should be considered as a last resort. The guidelines would also explain the rights of employees in situations where wage reduction was introduced unilaterally by employers. C for L further said that guidelines were in use in Singapore and had proved to be effective.

7. In response to Mr SZETO Wah's follow-up question on severance pay, C for L advised that under the Employment Ordinance employees had the option to calculate severance pay based on an average salary over a period of 12 months.

8. Miss CHAN Yuen-han shared the view that legislation should be introduced to protect employees' interests when wage reduction was involved. She considered that guidelines were not effective in protecting employees against unilateral wage reduction. The Chairman pointed out that the Employment Ordinance had, since its enactment in 1968, helped stabilize relations between local employers and employees for 30 years. He wondered why the Administration considered that legislation would give rise to more labour disputes. C for L responded that many factors should be considered before legislative means were resorted to and it was not advisable to regulate wage reduction by law. The Administration believed that it was important for employers and employees to hold discussions with a view to finding a solution mutually acceptable to both parties. Education and guidelines would be more desirable than legislation in dealing with wage reduction by employers. The Administration would require more time to assess whether the aforesaid guidelines would be effective. SEM added that in addition to the Ordinance, a system of tripartism or tripartite co-operation amongst employers, employees and the Government helped maintain harmonious relations between employers and employees. During the consultation process on the guidelines, if support could be gained from the employers associations and labour unions, pressure would be mounted on employers to adhere to the guidelines. The Administration would closely monitor the situation and would take up more responsibility if necessary.

9. Miss Emily LAU asked whether or not the Administration had been urged by employers not to introduce legislation on wage reduction. SEM explained that wage reduction hinged on a number of issues including notice to employees, severance pay and operation of the Protection of Wages on Insolvency Fund. The Administration, while realizing that the present moment was a difficult time, did not intend to act to arouse any confrontation or tension between employers and employees. Instead, LD could conciliate labour disputes related to wage reduction. In anticipation of the formulation of the guidelines, SEM said that more time should be given to the Administration to find out if the guidelines were effective in achieving their intended objectives. The Administration would work out additional measures if the guidelines and conciliation service by LD were proved to be not successful. SEM added that the guidelines would be discussed by the Labour Advisory Board (LAB) at its coming meeting. He would inform members of the views of employers represented in LAB in future.

10. In response to Mr LAU Chin-shek, C for L said that LD aimed to provide a channel of communication for employers and employees in handling wage reduction and that it would not examine the financial position of a company whereby the employer initiated a wage reduction. This should be done by professionals instead of by LD. Given that employees were already protected by the Ordinance, it would not be appropriate to legislate with a view to regulating wage reduction by employers.

11. In reply to Mr LAU Chin-shek's follow-up question, C for L reiterated that in the guidelines being drafted, employers would be advised to explore alternative means before resorting to wage reduction or retrenchment. In addition, employers would be encouraged to calculate severance pay based on the salary prior to wage reduction if employees did not accept wage reduction and were dismissed. Deputy Commissioner (DC for L) added that LD did not rely solely on legislation to handle labour disputes and that it had been successful in providing conciliation service to employers and employees. In the light of experience, conciliation efforts of Labour Relations Service officers would often be successful in bringing amicable settlement to disputes where employees were requested by their employers to accept wage deductions.

12. Referring to a recent incident where a company had given five days' notice to its employees to consider whether or not to accept wage reduction, Mr LEE Cheuk-yan asked whether the Administration considered the notice period adequate. C for L said that it would not be appropriate for her to comment on individual cases. Nevertheless, she expressed the view that employers should give adequate notice to employers when wage reduction was involved. In view of different suggestions on the period of such notice ranging from 7 days to four weeks, C for L said that the subject would be discussed by LAB at its meeting on 23 October 1998.

13. In response to a follow-up question from Mr LEE Cheuk-yan, DC for L said that the notice period given to employees for wage reduction was a controversial issue. Notwithstanding this, a notice of five days appeared to be relatively inadequate on the part of employees. He reiterated that while not relying solely on legislation to handle labour disputes, LD provided employers and employees with conciliation service. Where necessary, employers would be advised to provide employees with an adequate notice for wage reduction. LD was confident that labour disputes could be solved.

14. Mr HO Sai-chu, who was a member of LAB, said that if any guidelines and proposals were endorsed by LAB, employers would in general follow suit. The employers should be encouraged not to give up business in Hong Kong too easily. If a wage reduction was unavoidable in times of financial difficulties, it was important for an employer to discuss the problems with his employees and seek their understanding. The Government should not take any drastic measures to tackle wage reduction simply because there was a minority of unscrupulous employers. Efforts should be made to attract investment from overseas so that the local economy could revive as soon as possible.

15. Mr Andrew CHENG and Mr Michael HO said that the Democratic Party intended to introduce a member's bill on wage reduction with consideration given to notice to employees and calculation of severance pay as the Administration was not prepared to legislate in this area. In reply to Mr Andrew CHENG's enquiry about the Administration's stance, SEM said that in the event that a member's bill on wage reduction was introduced, the Administration would examine the bill with consideration given to -

  1. the content of the bill;

  2. whether the bill had contravened Article 74 of the Basic Law and the Legislative Council's Rules of Procedures;

  3. whether there was any discrepancy between the Basic Law and the Rules of Procedures when their relationship was studied; and

  4. any other issues related to the subject matter.

The Administration would formulate its views on the bill after it had a chance to study it.

Training and Retraining

16. Referring to the special tailor-made employees retraining courses run by ERB, Mr Kenneth TING Woo-shou enquired about the impending increase of resources to ERB for providing such courses and the number of workers who could benefit in the next two years. SEM said that the Government would provide a grant of $500 million to ERB to ensure that it would have adequate funds to expand its training capacity and improve the quality of its training programmes for the unemployed over the next few years. Taking into consideration major factors such as training and retraining needs of the unemployed/employed and feedback from employers, ERB would plan and conduct those special tailor-made courses as appropriate. More people would benefit from ERB's programmes and services and ERB would step up its publicity.

17. In response to Mr Kenneth TING Woo-shou's further question, SEM said that employers were represented in ERB. He welcomed employers' participation when courses were planned for the unemployed.

18. In response to Miss CHAN Yuen-han's question on the capacity of ERB to meet retraining needs of the unemployed, SEM advised that courses were planned and conducted according to practical needs, facilities and teachers' qualifications. Referring to the nine-month Certificate of Skills Training (Service Industry) Course questioned by Miss CHAN Yuen-han, DSEM explained that the course was a pilot scheme with an enrolment capacity of 1 000. Admission to the course was highly competitive as a few thousand applications had been received. The admission criteria of this particular course were higher than ordinary retraining courses because certificates would be awarded to course participants on completion of the course. Applications for enrolment were processed with consideration given to related factors such as whether the applicant was unemployed and how long he had been unemployed. Although some unemployed applicants could not be admitted to the course, those who were on the waiting list would be considered for admission when there were vacancies. DSEM further said that those unemployed persons aged 30 and above were given priority to enrol for ERB courses. Coupled with an impending increase in ERB's courses, more unemployed persons would have opportunities to attend retraining courses. For courses where the age criterion needed to be relaxed, flexibility would be given as appropriate. As a matter of fact, ERB had relaxed the age criterion for some courses.

19. In response to Miss CHAN Yuen-han's follow-up question, SEM reiterated that the Government had provided ERB with additional funding support in order that more courses could be conducted in the years to come. About 80 000 places in ERB's courses would be made available in 1998-99 and of these, one-third would be allocated to the unemployed. In the meantime, the Government took into account availability of job opportunities for course participants after they had completed the courses.

Recruitment of professionals from the Mainland

20. Responding to Dr LUI Ming-wah's question, SEM said that in its first report to the Chief Executive, the Commission on Innovation and Technology put forward a number of recommendations to turn Hong Kong into an innovation and technology centre for South China and the region. Hence, an Applied Science and Technology Research Institute would be established. The Commission had recommended, among other things, that Hong Kong should strengthen its industries' links to the technological institutes on the Mainland to make best use of the Mainland's research strengths and turn them into commercial products. In order to build a critical mass of expertise, the Government would consider measures which would enable employers to recruit the best professionals from the Mainland and also elsewhere in the world. Several bureaux including the Trade and Industry Bureau and the Security Bureau would be involved in implementing the recommendation. SEM further said that EMB would participate in the project especially in its planning stage. He assured members that the Panel would be kept informed of the progress in due course. Adm

21. On the implementation of the Pilot Scheme for the Entry of Mainland Professionals raised by Dr LUI Ming-wah, SEM said that there was a pilot scheme to recruit 1 000 professionals from the Mainland and that EMB, the Security Bureau and the Immigration Department were involved. The scheme had come to an end.

22. The meeting ended at 4:35 p.m.

Legislative Council Secretariat
12 November 1998