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During his final policy address today, Hong Kong’s Chief Executive Leung Chun Ying is expected to announce the scrapping of the Mandatory Provident Fund offsetting mechanism. In a statement released on Tuesday, five business groups protest the plan, calling it “totally unjustified”.
Under the proposed plan, employers would no longer be allowed to use the money they put into employees’ retirement funds to offset severance and long-service payments. Reportedly, the government will today announce a cut-off date after which the new policy will take effect.
In a statement released by The Federation of Hong Kong Industries, the Chinese Manufacturers’ Association of Hong Kong, the Hong Kong General Chamber of Commerce, the Hong Kong Chinese General Chamber of Commerce and the Hong Kong Employers Federation (“the Chambers”), the business groups said they are “deeply concerned”.
The Chambers feel the proposal is being introduced without sufficient consideration or consensus among stakeholders and urge the government to “maintain its communications with the community, deriving a solution that is acceptable to all parties and in the best interests of the community”.
Abolishing the current offset mechanism enjoys wide support from the public, as it would result in better retirement protection for employees. The Chambers, however, state that it would be “in direct contradiction to the original intention and purpose of the MPF System when this was first set up.”
They further argue that scrapping the provision will “impose a heavy financial burden on businesses, undermine international confidence, and cripple entrepreneurism”.
“As such, the proposed arrangement is at odds with Hong Kong’s economic prosperity and stability”, they state.
Under the current plan, employers will receive a government subsidy for ten years to help them bear the extra cost during the adjustment stage.
Federation of Trade Unions lawmaker Kwok Wai Keung told the South China Morning Post the best proposal would be not to subsidise employers at all, arguing that the business sector has been opposing any proposals that would improve employees’ lives for too long.
Update: The government has released the 2017 policy address, which includes the proposal to progressively abolish the offsetting of severance payments (SP) or long service payments (LSP) with MPF contributions. The full text can be read here.
Photo / iStock