For discussion
on 14 February 1997
FCR(96-97)105
ITEM FOR FINANCE COMMITTEE
HEAD 176 - SUBVENTIONS: MISCELLANEOUS
Subhead 924 Grant to Employees Retraining Board
Members are invited to approve a commitment of $500 million for a further grant to the Employees Retraining Board to enable it to sustain, expand and revamp the Employees Retraining Scheme.
PROBLEM
The Employees Retraining Board (ERB) requires additional financial resources to sustain, expand and revamp the Employees Retraining Scheme (ERS).
PROPOSAL
2. The Secretary for Education and Manpower (SEM) proposes to make a further capital grant of $500 million to the ERB to enable it to sustain its retraining programmes to assist local workers to rejoin the labour market, to revamp the ERS as well as to expand the scheme to cover new immigrants who are in need of assistance in seeking employment.
JUSTIFICATION
3. The primary source of income of the ERB is the levy imposed on employers of imported workers admitted under the various importation of labour schemes. The freeze since April 1995 on the allocation of quotas under the General Importation of Labour Scheme (GILS) and its subsequent termination in October 1995 has drastically reduced the income of the Board. Since February 1996, the Supplementary Labour Scheme (SLS) has replaced the GILS. Given the small scale of the SLS, it cannot provide an adequate levy income for the ERB to continue its existing level of activities, let alone expanding the retraining programmes to meet the requirements of the labour market in a rapidly changing economy. Members approved a grant of $300 million to the ERB in May 1996 [FCR(96-97)7] as Governments contribution to employees retraining, in addition to a grant of the same amount to the Board in November 1992 [FCR(92-93)71].
4. The ERB now anticipates an expenditure of $249 million in 1996-97 to provide retraining for about 59 000 workers, against an estimated income of $33.9 million from the levy under the importation of labour schemes and bank interest. We have recently conducted a comprehensive review of the ERS and have recommended, among other things, to revamp the retraining programmes and to expand the scheme to include new immigrants. Although the Board had a balance of $308 million at the end of December 1996, it would not have enough financial resources to implement the recommendations of the review or to draw up concrete plans for its future activities beyond early 1998.
5. SEM proposes to provide a further capital grant of $500 million to the ERB. With this proposed capital grant and its balance of funds, we expect the Board to continue its activities and to take forward the recommendations of the ERS review in the next few years. We will keep the funding arrangement for the Board under review in the light of the actual operational needs of the revamped ERS.
FINANCIAL IMPLICATIONS
6. If Members approve the proposal, we shall offset the supplementary provision required by deleting an equivalent amount under Head 106 Miscellaneous Services Subhead 251 Additional commitments.
BACKGROUND INFORMATION
7. The ERB was established in late 1992. It provides retraining to local workers aged 30 or above to assist them in taking on new or enhanced skills so that they can adjust to changes in the economic environment. Over the years, we have expanded the scope of the ERS significantly. The number of retraining courses by type has increased from 86 at the end of March 1994 to 215 at the end of December 1996. The number of enrolled retrainees has also increased over nine times from 14 364 to 154 608 during the same period.
8. The ERB administers retraining programmes through a network of training bodies. At present, there are 57 training bodies with 132 training centres. The ERB sponsors the retraining courses provided by these training bodies and provides a retraining allowance to full-time retrainees. Previously, the ERS focused on providing retraining for local employees. Following the enactment of the Employees Retraining (Amendment) Ordinance 1997, which extends the ambit of the ERS to cover new immigrants, the ERB is now running pilot courses for this group of new clients.
Education and Manpower Branch
February 1997
Last Updated on 5 August 1999
