Under the MPF offsetting mechanism, employers in Hong Kong were allowed to settle severance and long-service payments to laid-off staff using money the firms contributed to the employees’ retirement fund accounts.
Back in 2012 during his CE election campaign, Leung Chun-ying vowed to abolish the controversial offsetting mechanism in a step-by-step manner and also study the feasibility of legislating for standard working hours.
Five years on, in his Policy Address in January this year, Leung finally put forward a plan to scrap the mechanism.
Firstly, he proposed that the abolition should have no retrospective effect. Secondly, he suggested lowering the proportion of an employee’s monthly wages against which his or her severance and long-service payments are calculated, down from the existing two-thirds of a month’s wages to only half of a month’s wages as compensation for each year of service.
And thirdly, he promised that the government would share part of the expenditures on severance and long-service payments of employers, particularly small business owners, for ten years after the abolition.
However, both the labor and the business sectors are opposed to his proposals, with the former criticizing Leung for not doing enough while the latter has been against the abolition of the MPF offsetting mechanism all along.
Despite the opposition from both sides, sources said Leung is determined to take his proposals to the Executive Council (ExCo) for final discussion without changing a single word.
Even so, some business sector heavyweights said they wouldn’t be worried even if ExCo eventually agreed on Leung’s proposals. It is because when they met with CE-elect Carrie Lam earlier on, the message they got is that the incoming administration has no intention of sticking to Leung’s original plan even if it is passed in ExCo by the end of this month.
Given that, it appears Leung is set to fulfill his election promises finally, but on paper only, in his last month in office. He would probably consider that as mission accomplished because he did finally put forward a detailed plan on the issue and push it through ExCo as he had promised.
As to whether his plan will be truly carried out after July 1, well, it is not his problem anymore.
This article appeared in the Hong Kong Economic Journal on June 13
Translation by Alan Lee with additional reporting
[Chinese version 中文版]
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