Financial News
Author: Zhai Ziqian
2020-12-16 19:49
Last update date: 2020-12-16 19:50
According to the latest figures released by the government, Hong Kong’s seasonally adjusted unemployment rate from August to October is 6.4%, the same as the figure from July to September.
However, as the two rounds of the government's employment protection program have come to an end, and the Hong Kong government has no intention of launching the next round of job protection, experts estimate that the unemployment rate is going to rise further, causing many people to suffer from financial pressure.
As a result, various proposals have been put forward in the community, hoping to alleviate the hardship of the people, including taking the MPF in advance for emergency purposes.
From all walks of life, employers, employees, and even scholars have voices that it is necessary to allow the unemployed to withdraw part of the MPF in advance so that the trillion-dollar MPF can be turned into an "emergency fund". What are the rationale and operations behind it?
A large-scale social movement broke out in Hong Kong last year. This year we ushered in the epidemic of the century. The local economy is miserable. The unemployment rate has soared to 6.4%. The government estimates that Hong Kong's GDP will shrink by 6.1% this year, the worst year in history!
The economy is deteriorating, and the public will inevitably have to "pump the water", which sparked the discussion of the MPF raising money early.
At present, MPF assets have exceeded 1 trillion Hong Kong dollars, and the average account balance of employees exceeds 245,000 yuan, which is a lot of money. As more and more people join the unemployed army, financial pressure is increasing. "The cockroach sees the water"-can't drink.
The government announced last month that the unemployment rate from July to September rose to 6.4%, and the number of unemployed exceeded 250,000.
(Profile picture / Photo by Liang Pengwei)
Scholars expect unemployment rate to break 7%
The second round of the employment guarantee plan ended in November. Li Zhaobo, a senior lecturer at CUHK Business School, estimated that the unemployment situation in December will be reflected in January next year.
Even if the unemployment rate will not soar from 6.4% to over 7% by then, there is still a good chance that it will rise to 6.7%, and there will certainly be a chance to rise to 7% in the future.
Zhou Qiping, a senior human resources consultant and managing director of Yizhi Consulting, said that the two rounds of employment guarantee plan are over, and it is believed that the unemployment rate will rise in the short term.
As for the business sector, Mai Meiyi, president of the Hong Kong Federation of Small and Medium Enterprises, said that the epidemic prevention measures continue to be tightened. I believe the business community will be disappointed in the peak consumption seasons such as Christmas, Winter Solstice and New Year.
She also expects that the next time the government announces the unemployment rate, it will have a chance to rise to over 7%.
Senior human resources consultant Zhou Qiping, MPF as a "life-saving fund" may be very important for the middle and grassroots.
(Profile picture)
The government recently announced that it will not implement the third round of employment protection plan, and will instead provide precise assistance to industries affected by the epidemic.
However, Mai Meiyi questioned whether the new measures can fully cover the affected industries, such as subsidies for catering and retail, and whether suppliers can receive subsidies. I believe many small and medium-sized enterprises will continue to lay off employees or even close down in the future.
People from all walks of life support the "advanced" MPF "is important to the grassroots"
Facing the rising unemployment rate, there have been voices demanding "advance" MPF contributions. Li Zhaobo bluntly said that if it is the first and second wave of the epidemic, he does not think it is necessary to allow this, and it is always to "make future money first." .
He currently believes that the public has the right to get back part of the MPF for emergency use, and he bluntly said: "The third and fourth wave of the epidemic is the responsibility of the government. Unemployment does not depend on you, but on your own. use!"
Zhou Qiping also agrees with the option of withdrawing MPF in advance. "The severance payment hedging is only part of the employer, and part of it is with the MPFA." Zhou Qiping also pointed out that this "life-saving payment" may be very important to the middle and grassroots because it is not. After a small number of people are unemployed, they cannot immediately join the full-time market or rely on part-time jobs to make ends meet. When their finances are very tight, the MPF can only be kept in the MPF account and cannot help relieve financial difficulties.
Mai Meiyi agreed to allow the unemployed to advance part of the MPF in advance.
(Profile picture)
As one of the employers, Mai Meiyi also agrees that the unemployed should be allowed to advance part of the MPF in advance, but she pointed out one point that needs to be noted. Since the current MPF hedging mechanism is still in effect, employers should not allow employees to withdraw their contributions in advance.
"Originally, employer severance can hedge against the MPF. If employees bury all the employer's contributions, then the severance employer will have to carry an extra sum of money." Therefore, she supports allowing citizens to withdraw part of their personal contributions for emergency.
The form of extraction can be discussed, including future requirements for replacement
As for how to withdraw MPF in advance, Li Zhaobo believes that it can be "conditional," such as how long you will be unemployed and your asset status, but the most important thing is that the approval process is fast.
In addition, "how much can be dumped", assuming that the account has 100,000 yuan, or 50,000 yuan can be withdrawn, the ratio can be determined with age, because younger citizens can still accumulate MPF gradually in the future.
The Secretary for Financial Services and the Treasury, Xu Zhengyu, in response to recent requests for MPF "rebate", described it as "chicken theory", thinking that if the chickens that have not been raised today are slaughtered today, there may be nothing in the future.
Secretary Xu even mentioned that more than 30% of the MPF accounts contributed less than 10,000 yuan, and half of the accounts contributed less than 50,000 yuan. He questioned how much help the public would benefit from withdrawing MPF in advance.
(Profile picture)
However, Li Zhaobo believes that if citizens have to transition in half a year, the monthly living expenses will be 4,000 to 5,000, and half a year will be about 30,000. I believe that withdrawing part of the MPF will be of great help to the public.
He further suggested that if the public is allowed to withdraw MPF in advance, there is room to discuss whether it is necessary to supplement the amount withdrawn in the future.
"When it is interest-free, it is possible to discuss how to replenish (the amount withdrawn) in the future." The cost of withdrawing the MPF in advance is to miss the average annualized return of the MPF of about 4%.
Li Zhaobo suggested that the MPF's "backwater" plan could establish certain conditions.
﹙Profile Picture﹚
The current real needs should be addressed first
Zhou Qiping believes that Xu Zhengyu’s "chicken theory" is theoretically correct. The fund does take time to grow slowly, but the problem is that the public has a practical need. "Do you think he really wants to carry him? He wants to grow old? I have money to come, but the problem is that it will go into the future. There is no food today."
She pointed out that if the government does not allow the public to withdraw MPF in advance, it should study whether to grant unemployment assistance or increase the maximum CSSA requirement.
She once again criticized the government's job protection plan, pointing out that the government may not have seen the development of the epidemic clearly at the beginning, and launched a job protection plan to protect employees by protecting enterprises.
But over time, even if the company can be kept, but the employees cannot be kept, should we continue to use such circuitous methods to help the public?
Zhou Qiping said bluntly, "How much the government has done and how many problems are there for everyone to see." He also called on officials to "should pay more attention to the land in terms of rescue measures."
MPF Unemployment Rate Li Zhaobo