weekly
Written by: Cheng Xue
2021-01-27 16:23
The last update date: 2021-01-27 16:27
It has been a year since the COVID-19 epidemic has continued, and Hong Kong’s economy is deteriorating, and all walks of life are inevitably affected.
Among them, the construction, tourism, retail, accommodation and catering industries are more like entering a long winter and ushering in a wave of closure.
The Census and Statistics Department recently recorded a seasonally adjusted unemployment rate of 6.6%, with an unemployed population of 245,800.
Workers who have suffered layoffs are not only unable to obtain targeted unemployment assistance from the government, but because of the MPF hedging arrangements, they have to "pay money to scramble themselves". The original timetable stipulates that the proposal to cancel the MPF will be submitted last year. The hedging arrangement may be postponed to the next Legislative Council.
Three years and three years, how long will the wage earners have to wait to cancel the MPF hedging?
Zhou Yongxin, professor emeritus of the Department of Social Work and Social Administration of the University of Hong Kong, participated in the entire process of MPF legislation from 1995 to 2000, and served as the Chairman of the Advisory Committee of the Mandatory Provident Fund Scheme from 1998 to 2007.
He clearly pointed out that the original intention of the Mandatory Provident Fund Scheme was to serve as a retirement protection for working people.
"In the 1980s, Hong Kong society had extensive discussions on formulating a pension system." Zhou Yongxin recalled: "At that time, I participated in a campaign with other labor groups and called on the government to establish a central provident fund." The so-called central provident fund refers to The government regulates the consumption fund publicly to solve the retirement and pension problems of employees. A typical example is the Singapore Central Provident Fund System established in 1955.
After many reforms, the Singapore Central Provident Fund system has been developed into a social insurance system that provides social security items such as pension, medical care, and savings to members of the society. Its coverage includes employees in the public and private sectors and self-employed persons.
The Emeritus Professor Zhou Yongxin of the Department of Social Work and Social Administration of the University of Hong Kong participated in the entire process of MPF from legislation to implementation.
(Profile picture/Photo by Huang Baoying)
MPF hedges against political compromise
According to the "Historical Development of Hong Kong Retirement Scheme" document compiled by the Hong Kong Legislative Council Secretariat, as early as 1966, the government had started a study on the feasibility of establishing a central provident fund.
In the 1980s when the society’s voice for pension protection was soaring, the Legislative Council had discussed the establishment of a central provident fund, but the government was worried that this huge sum of money might be subject to central control for investment purposes, which would make the fiscal, financial and foreign exchange markets unstable. , Resulting in differences of opinion, which eventually led to a miscarriage of the plan.
In 1992, Patten became the governor of Hong Kong. In 1994, he proposed the Hong Kong Old Age Pension Scheme. It was recommended that a total of 3% of employees’ wages should be made through mandatory contributions from employers and employees, and the government should inject 10 billion Hong Kong dollars as capital, which is a total of 65 years old and above. Eligible residents pay a monthly pension of about 30% of the median salary.
During the public consultation period, the plan received 50% support and opposition.
"On the one hand, due to the imminent return, the Chinese representatives of the Sino-British Liaison Group feared that the Hong Kong government would have to make long-term commitments after the return, and therefore resisted this plan; on the other hand, Patten's plan did not receive support in the Legislative Council." Zhou Yongxin believes This is the main reason why the authorities were forced to abandon the old-age pension plan.
Two months after the "abortion" of the old age pension scheme, in March 1995, the British Hong Kong government proposed a mandatory private occupational retirement protection system to the Legislative Council and submitted a bill to establish an MPF in June.
In July, the Legislative Council passed the "Mandatory Provident Fund Schemes Ordinance", which is a super fast.
Zhou Yongxin clearly pointed out that the original intention of the Mandatory Provident Fund Scheme was designed to serve as the retirement protection for working people.
(Profile picture)
"In the initial discussion of the MPF scheme, there was no hedging arrangement." Zhou Yongxin, who participated in the formulation of the MPF scheme, recalled: "Why did there end up with such an arrangement? It is actually a political compromise." Zhou Yongxin believes that because of Hong Kong The British government is eager to formulate a retirement protection system before the transfer of sovereignty. This is the British practice of colonial colonies. Therefore, by allowing hedging to benefit the business sector, in exchange for the legislative council, which is responsible for business affairs, to support the MPF scheme.
What is hedging?
According to the Mandatory Provident Fund Schemes Ordinance, both employees and employers covered by the MPF system are required to make regular contributions to the MPF scheme. The contributions of both parties are 5% of the employee’s relevant income and are subject to the minimum and The highest level of relevant income, accrued benefits can only be claimed until the plan member reaches the retirement age of 65.
However, when an employee is dismissed, the employer’s severance payment or long service payment (long service payment) can be offset from the employer’s contribution in the employee’s MPF account and its accrued benefits to offset the upper limit of the amount It is 390,000 Hong Kong dollars.
This continued the system that when severance payment and long-term service payment were introduced into the Employment Ordinance in 1974 and 1986 respectively, employers could offset their remuneration or provident fund based on their seniority to reduce the burden on the business community.
However, for employees, this means that when they are dismissed, they have to be forced to advance their pension funds to pay for their immediate difficulties.
Workers who have suffered layoffs are not only unable to obtain targeted unemployment assistance from the government, but because of the MPF hedging arrangements, they have to "sell themselves with money."
(Photo by Ou Jiale)
Three years and three years to cancel the hedge
Since the implementation of the MPF in 2000, there have been many voices criticizing the unreasonable hedging arrangements and the exploitation of labor.
In 2012, Leung Chun-ying proposed in his election platform to "gradually reduce the proportion of employers’ accumulated contribution rights in the MPF account used to offset employees’ long service payments and severance payments." The MPF hedging plan threw the mess to the Lam Cheng government.
In 2018, Chief Executive Carrie Lam promised in his “Policy Address” that he would cancel the MPF hedging arrangement during the term of the current government and implement it two years after the amendment.
In the same year, the government announced the preliminary concept and final arrangements for the cancellation of MPF hedging in May and November respectively.
The final version of the plan continues the line-drawing method proposed by the Liang Zhenying government, that is, taking the implementation date as the line. Before the implementation date, the employer's contributions and accumulated equity can still be used for hedging, and the subsequent parts cannot be used for hedging.
The plan requires each employer to open a special savings account and make contributions based on 1% of the employee’s monthly income until it reaches 15% of the employee’s annual income, which is used to pay severance or long service payments.
At the same time, the government promised to use a two-tier funding approach to help companies through the transition period, the first tier funding for 12 years, the second tier funding for 25 years, and the initial concept of 17.2 billion yuan commitment to 29.3 billion yuan.
The plan sets out a timetable for the cancellation of MPF hedging, that is, to submit a draft empowerment legislation to the Legislative Council in 2020, which will be passed during the term of the current government in 2022, and will be cancelled two years after the legislation is passed-that is, in 2024. " Hedge".
In 2018, Chief Executive Carrie Lam Cheng Yuet-ngor promised in his “policy address” that he would cancel the MPF hedging arrangement during the term of the current government and implement it two years after the amendment.
(Profile picture)
However, in November 2020, in response to media enquiries, the Labour Department admitted that due to the complicated issues involved in the legislation, a number of existing laws, including the Employment Ordinance, the Mandatory Provident Fund Schemes Ordinance, and the Occupational Retirement Schemes Ordinance, must be made Amendments, and new legislation must be formulated to implement related supporting measures. In addition, the current Legislative Council will be postponed for one year. Therefore, it is planned to submit the amendment bill to cancel the MPF hedge to the next Legislative Council.
Zhou Xiaosong, secretary-general of the Hong Kong and Kowloon Federation of Labor Organizations, said bluntly that he was worried about the government's "fighting."
He analyzed that if the submission of the bill is postponed to October 2021, there will only be eight months left before the end of the current government’s term in June 2022. “In fact, there is no time for the passage of the law.” He said .
Zhou Xiaosong believes that the current plan is a rare consensus formed after discussion and concessions.
He explained that for the labor sector, the biggest concession made is to agree to implement it in a "crossed" way, that is, "let the past go". The part of the employer's contributions before the implementation can still be used to hedge long-term service payments and severance payments.
"This method is of no benefit to employees who are close to their retirement age and may retire within five to ten years." Zhou Xiaosong said.
The reason for making such a concession is to alleviate the business community's dislike of the cancellation of MPF hedging.
Liberal Party leader and member of the Legislative Council Zhong Guobin said frankly, "If the MPF hedging arrangement is regarded as a political compromise, does it mean that the government has deceived the business community from the very beginning, planning for the future will backtrack?"
He pointed out that long before the introduction of MPF legislation, many employers had made private provident funds on their own to save money and pay employees' severance payments and long-term service payments.
After negotiation with the government, the business sector made concessions, gave up the provident fund and participated in the government’s MPF scheme, and agreed to contribute 5% of the employees’ monthly income. "This is a great burden for employers. If it were not for the government Starting to do MPF, how can there be a problem of canceling hedging today?" He asked.
In view of the tough attitude of the business sector, the labor sector chose to make concessions and accept the cancellation of the MPF hedging arrangement through a crossed approach.
"Calculating from the beginning on the implementation day, it can't be said to be a backlash," Zhou Xiaosong said.
The MPF has entered the 20th anniversary of the retirement of Hong Kong people is really guaranteed?
[New Crown Pneumonia] It is not too late to cancel the MPF hedging
[New crown pneumonia] MPF hardly saves unemployment, the government makes a dilemma
Does the MPF lose money for the whole people and continue to "hedge" to benefit the business community?
Zhou Xiaosong, secretary-general of the Hong Kong and Kowloon Federation of Labor Associations, is worried that the government will "take the lead" and refuses to cancel the MPF hedging.
(Photo by Ou Jiale)
"The government wants to overturn its commitment to the business community 20 years ago and cancel the hedge, and the business community is willing to accept it." Zhong Guobin added, but for the business community, the current plan is far from satisfactory.
"The main reason is that it is too complicated." He criticized that whether it is the method of marking or the calculation of the first and second tiers, the calculation methods are very complicated, which makes the employers unable to know how much they have to bear.
What puzzles him is why the government is so stubborn and unwilling to adopt the "fund pool" plan proposed by the business community: to pay for related expenses in the form of a fund pool with no term limit, based on the total wages of Hong Kong in 2017 of 600 billion yuan , The business community raises 1% of the overall capital each year, that is, 6 billion yuan is accumulated in the fund pool in the form of investment every year.
"Compared with Luo Zhiguang's plan, the (fund pool plan) can cancel hedging, which is acceptable to the labor sector. It is simple and clear. The business community can understand it. The government invests much less. Luo Zhiguang's so-called moral hazard does not exist. "Zhong Guobin analyzed, "On the contrary, I predict that once Luo Zhiguang's plan is implemented, there will be a wave of bills. Why? The boss can’t understand the new plan. The easiest way is to complete the existing contract with all employees and hedge the previous money. , And then sign a new contract. There is a risk in this."
Based on the above reasons, in his view, if the government forces the "final version" of the cancellation of the hedging plan, the business community will definitely fight to the end.
However, if the government really delays the submission of the bill, or even fails to pass legislation within the current government, there is still no conclusion about what plan the next government will adopt, or even whether it will cancel the hedging.
"For example, when the Lam Cheng government overturned the plan proposed by Leung Chun-ying and re-planned, then the next government's cancellation of the hedging plan may have to be discussed from the beginning. The worst consequence is that the next government may not do this at all. "Zhou Xiaosong said.
As far as the labor sector is concerned, if the legislation cannot be completed during the term of the current government, the government will not only fail to fulfill its promises, but will also make previous efforts in vain.
The above excerpt was recorded in the 250th issue of the "Hong Kong 01" Weekly Report (January 25, 2021) "Wage earners actually "post money to scramble themselves" and cancel the MPF hedging can no longer wait." If you want to read the full text, please
click here to
sample the weekly newsletter and browse more in-depth reports.
Highlights of the 250 issue of "Hong Kong 01" Weekly News:
[Cover Report] Saying goodbye to Trump Biden's new deal to fight the epidemic and seek unity, and political reform should not be forgotten
Sino-U.S. relations have entered a new pattern, "international line" fantasy should wake up
Distributing money can’t solve the fundamental problem. Economic governance needs a good government.
Workers actually "post money to scramble themselves" and cancel the MPF hedging
The key to the BNO dispute from changing naturalization conditions from travel documents
Is the theme park becoming a recreational area? Is the ocean park facing a dead end or a way out?
This is how the "epidemic area" must be sealed
Half a century, the relationship between China and Australia has fallen to a freezing point.
The tragic conclusion of the Irish Mother and Child Home sets the final chapter in the decadent Catholic history?
[Hong Kong Re-Planning] When will the "New Territories Bull" push?
Look at Hung Shui Bridge
01 Weekly report in-depth report on MPF Zhong Guobin MPF hedges Zhou Yongxin's retirement protection retirement system