For Immediate Release
In a joint press conference today (23 June), Hong Kong’s five leading chambers of commerce (The Five Chambers) -- the Federation of Hong Kong Industries, the Chinese Manufacturers’ Association of Hong Kong, the Hong Kong General Chamber of Commerce, the Chinese General Chamber of Commerce, and the Employers’ Federation of Hong Kong, expressed regret over the Hong Kong Government’s decision to implement an “Effective Date” to abolish the MPF Offsetting Mechanism, despite repeated objections from employers’ representatives.
Additional 1% contribution would benefit more employees
The Five Chambers emphasised that the business community truly values a harmonious relationship between employers and employees. Great sincerity has been made in exploring different proposals regarding the MPF Offsetting Mechanism. These include the proposal to put in an additional 1% contribution to each employee’s MPF account.
It is estimated that an additional 1% contribution by all employers would amount to more than HK$5 billion annually. This amount is more than sufficient to cover the approximately HK$3 billion involved in offsetting annually. This additional 1% contribution would be injected directly into all employees’ MPF accounts, and benefit almost all 2.8 million Hong Kong employees, as opposed to the 44,000 MPF account holders involved in Severance and Long Service Payment claims. They represent no more than 2% of all MPF members.
The Five Chambers’ proposal would benefit most workers and is relatively convenient and simple to implement. Employers would be able to estimate their payments more easily even with the additional contribution.
Overlapping of MPF/Long Service Payment shouldn’t be taken lightly
The Five Chambers have repeatedly pointed out that there is overlapping of retirement protection between Long Service Payments and the MPF. The Government also agrees to the existence of certain overlapping between both arrangements. The Government’s proposal does not address this issue properly. Although the Government has proposed a time-limited subsidy, employers would ultimately pick up both tabs after the 10-year period ends, putting employers in an unfair position.
The Five Chambers believed that any solution to the offsetting arrangement must also take into account the overlapping of long service payment with MPF. For instance, if the offsetting mechanism between MPF and severance payment is to be terminated, we should abolish the long service payment. This would resolve the issue of both overlapping of MPF and long service payment and double payment by employers once and for all.
The perception of the offsetting mechanism being detrimental to employees’ retirement benefit is deceiving. Under the current mechanism, retired and dismissed employees are entitled to early withdrawal of accumulated employers’ contributions from the employees’ MPF account, which would water down employees’ retirement protection. Indeed, employees’ benefits are withdrawn in advance and not “washed away.” The actual issue that we need to deal with is early withdrawal, rather than simply abolishing the offsetting mechanism.
The Five Chambers emphasized that faced with very thin profit margins and rising labour costs, SMEs are barely breaking even. The abolishment of the offsetting mechanism may put further pressure on employers, leading to possible business closures and dismissals of long-serving employees, who would be replaced by part time workers. These developments would badly impact Hong Kong’s business environment, employment and creativity.
In conclusion, the Five Chambers are open to all suggestions and willing to shoulder a greater responsibility of employees’ retirement protection. Our proposal also demonstrates our sincerity as it covers more employees. We are eager to continue to work with the Government and all stakeholders to arrive at a proposal that is acceptable to all and in the best interests of the community. However, all proposals should take into account the impact on employers, employees and society at large. It is an issue that all sides must handle with caution, and avoid hasty decisions.
A video of the press conference can be found here.
Media inquiries: Please contact Mr William Ngo at 28231291 / [email protected]