Hong Kong trade unions and business at odds over abolition of provident fund offset mechanism
Unions call on government to honour its pledge to abolish the provident fund offset mechanism, a move that business says will be far too costly
Fully three years after Chief Executive Leung Chun-ying vowed in his election manifesto to revamp the controversial offset mechanism for Hong Kong's retirement savings system, there appears to be light at the end of the tunnel.
Labour and welfare minister Matthew Cheung Kin-chung was said to have floated a "nonretrospective" proposal on how to scrap the mechanism, which allows employers to use their portion of contributions to the mandatory provident fund to offset severance and long-service payments for employees.
Meanwhile, Mandatory Provident Fund (MPF) Schemes Authority chairman David Wong Yau-kar is said to have suggested setting a salary line to allow lower-income workers to be the first to benefit.
Cheung and Wong's views were expressed in separate meetings with the Federation of Trade Unions (FTU) two years ago and last month respectively. But they only came to light recently, according to FTU lawmaker Wong Kwok-kin, who is also a former non-executive director of the MPF Schemes Authority.
Current labour legislation states that a company which fires a worker with more than five years of service has to make a long-service payment equal to the number of years of service multiplied by two-thirds of the employee's monthly income up to HK$15,000 - up to a maximum of HK$390,000.
But three years after Leung became chief executive, nothing has happened - there has been no review, no consultation, no study and no mention in the chief executive's policy address earlier this year.
