LegCo Panel On Manpower
Report of the Panel’s Enquiry into the circumstances
surrounding the labour disputes involving imported workers
under the Special Labour Importation Scheme for the
New Airport and Related Projects and related issues

This paper sets out the Government’s views on the major findings and recommendations of the above report.

General Remarks

2. The Administration appreciates the efforts of the Manpower Panel in conducting the enquiry and in compiling the detailed report. The questions raised by the Panel during the enquiry provided the Administration with useful ideas in reviewing and improving the various operational aspects of the Special Labour Importation Scheme for the New Airport and Related Projects(SLIS).

3. We are pleased to note that the Panel recognises the importance of the SLIS in facilitating the timely completion of the new airport and related projects. The SLIS has always been operating on the cardinal principles that local workers must be given priority in filling any vacancies in the market, that local workers should not be displaced by imported workers, and that only those employers who are genuinely unable to find the required number and types of local workers are allowed to import workers for such vacancies.

4. At the same time, we attach great importance to safeguarding the rights of imported workers. We therefore have taken prompt and proactive measures in tackling the problems revealed following the spate of labour disputes involving imported workers under the SLIS late last year. These measures have proved effective in stamping out and preventing the malpractice exposed then. We are glad to note that the Panel has acknowledged the Administration’s efforts in its report. On the whole, the SLIS is now operating smoothly.

5. We have carefully studied the findings and recommendations in the Report, and have adopted some of the recommendations aimed at further improving the effectiveness of the SLIS in achieving its objectives. These include:

    - arranging for quota applications to be first vetted by the New Airport Projects Coordination Office (NAPCO) to ensure that only those applications for imported workers whose number, type and duration of employment are compatible with the nature and manpower requirements of the relevant works contracts will be processed further;

    - ensuring that NAPCO keeps a record of the manpower requirements of each of the main contracts and obtains information on the manpower requirements of the subcontracts as far as practicable from the contractors concerned;

    - ensuring that NAPCO provides those information obtained from the contractors concerned about the percentages of imported workers engaged by principal contractors and subcontractors (with rough breakdowns by work types as far as practicable) when forwarding its comments to the Secretary for Education and Manpower, the approving authority;

    - arranging for the Immigration Department to include information about the work type and the actual wage amount in the notification letters to imported workers;

    - continuing to ensure that all imported workers are fully aware of their rights and benefits, especially their wage entitlements, through our inspection efforts, briefings for imported workers and maintaining appropriate complaint channels;

    - continuing to guard vigilantly against illegal deployment of imported workers to work outside that stipulated in their employment contracts through enforcement measures; and

    - continuing to explore ways and means to improve the effectiveness of the Labour Department’s inspection visits to the workplaces and accommodation facilities of the imported workers to ensure that they are well aware of their rights and benefits, and to guard against any abuses of the Scheme.

Responses to Major Findings and Recommendations

Wages of imported workers

6. Under the SLIS, imported workers are to be paid no less than the median monthly wages of local workers in comparable positions. The Panel has found that workers’ knowledge of their rights, particularly relating to the Government’s stipulated wages varied from case to case. The Administration agrees that more should be done to better ensure that imported workers are aware of their rights and benefits, especially their wage entitlements. To this end, we have introduced the following improvement measures since November 1995:

  1. provision of a 24-hour Labour Importation Telephone Service in four languages;
  2. imposition of new terms and conditions on the employers that they should-

      allow workers to attend compulsory briefings organised by the Labour Department within eight weeks of their arrival;

      provide each imported worker with details of his earnings including overtime wages and allowances;

      ask each imported worker to sign on an acknowledgement list upon receipt of the wage information if he agrees to the amount of payment;

  3. distribution of copies of standard employment contracts, information pamphlets/cards to imported workers during inspection visits and briefings on sites;
  4. making it a condition of approval of entry visa that each imported worker is required to produce his original copy of employment contract for inspection at the time of his registration for Hong Kong Identity Card with effect from 6 February 1996; and
  5. making it a condition of approval of extension of stay that employers are required to provide a Certification of Wage, with workers’ signature, declaring that the workers are working in the specified posts and have been paid wages in accordance with their employment contracts.

7. Another finding of the Panel is that contractors were allowed to import workers with lower median wages to undertake jobs with higher median wages. The Administration agrees that, apart from the above measures to prevent underpayment of wages, safeguards should also be tightened against illegal deployment of imported workers outside that specified under their employment contracts. To this end, conditions of stay of the employment visas of imported workers have been changed with effect from 6 February 1996 by specifying that workers are not allowed to change employer, post, and place of work. The employment contracts that clearly identify the post and place of work of the worker will bear a unique employment contract number. Entry visas and landing conditions will also contain the employment contract number, thus effectively forbidding any unauthorised change of employer, post and place of work. Effective prosecution can then be taken against employers and workers who are found to be in breach of any of the landing conditions.

8. The Panel also recommends that the quota approval letter issued by the Immigration Department should stipulate the conditions of stay, by including information relating to the work type and the actual amount of wages, and this letter should be produced to the Immigration staff at the time of entry to Hong Kong. The Administration agrees that the Immigration Department should include information about the job type and the actual wage amount in the notification letter to workers.

9. Under the SLIS, employers are required under the standard employment contract to make payment of wages to each and every of their imported workers by way of autopayment and ensure that was wages are paid directly into the imported worker’s account. The Panel has found that this autopay arrangement was not able to prevent employers from paying lower wages to workers if workers were willing to authorise the transfer of any part of their wages to the employers or other parties. The Administration’s view is that autopayment ensures that the stipulated wages have been paid into the bank accounts of the imported worker. No system can, however, prescribe how these workers spend their money after payment of wages into their bank account. Nevertheless, with the improvement measures to make imported workers more aware of their rights and benefits, and the tightening of control over labour service companies by the Chinese authorities, the possibility of transfer of wages to third parties should be much reduced.

Workplace Inspections by Labour Department

10. The Labour Department pays regular inspections to the workplaces and places of accommodation of imported workers to guard against abuses of the conditions of SLIS. The Panel has found that the infrequent and pre-arranged workplace inspections by Labour Inspectors made these visits difficult to detect irregularities. The Administration agrees that more frequent inspection visits would improve the effectiveness of such inspections in guarding against malpractice. In this connection, the Labour Department has stepped up its site inspection efforts to the effect that it is now able, through its initial inspection visits and briefings, to reach up to 90% of all the imported workers, for the purpose of informing them of their rights and benefits relating to their employment in Hong Kong. Moreover, at least two inspections will now be conducted in respect of each contractor per year.

11. As regards pre-arranged visits, the Administration does not consider that such visits are ineffective. In fact, the majority of offences and non-statutory breaches of conditions of the Scheme were detected during these pre-arranged visits. Although we have also paid surprise workplace inspections in addition to pre-arranged ones, this type of inspection has its own limitations because some work sites are not easily accessible without using the transport provided by the contractors; the required wage and employment records may not be kept on site; and the accountant may not be present to help explain the method of wage calculation or the computer codes used in the wage records.

12. The Panel considers that the Administration relied too heavily on workers to report malpractice and this was not of any help, as workers might be reluctant to report them for fear of losing their jobs. The Administration’s view is that it is in line with all the improvement measures which seek to inform workers clearly of their rights and benefits under the SLIS, and the provision of a 24-hour labour importation telephone service so as to encourage imported workers to adopt a more pro-active approach in reporting malpractice under the Scheme. Since early 1996, the Airport Authority has also made available offices on the new airport site for Labour Department and trade unions to receive any complaints from workers. In fact, apart from acting on complaints from these workers, the Labour Department has conducted more frequent inspections at workplaces to protect the imported workers’ rights and benefits. The Administration has not therefore placed undue reliance on information supplied by imported workers. Rather, information from workers is only complementary to, and not a substitute for, our enforcement efforts. Moreover, assistance has been, and will continue to be, provided to those imported workers who are dismissed by employers.

13. The Panel recommends that the Government should review how to improve the effectiveness of the inspections to work sites such as through standardisation of documents (like wage records) and easier identification of workers. The Administration agrees that apart from stepping up workplace inspections as outlined above, we should continue to explore possible ways and means of improving the effectiveness of these inspection efforts.

Activities of "middlemen"

14. The Panel recommends that the activities of the "middlemen" who are authorised by employers to recruit persons for employment on their behalf should be covered by the definition of "employment agency" under the Employment Ordinance, so that their activities are regulated by legislation. Under the Employment Ordinance, an ‘employment agency’ means a person who operates a business the purpose of which is to obtain employment for another person, or to supply the labour of another person, to an employer. No person, including so-called ‘middlemen’ shall operate, manage or assist in the management of an ‘employment agency’ unless he is the holder of a licence or certificate of exemption issued in respect of the employment agency. However, this regulatory control does not apply to any employment agency which is being operated by an employer for the sole purpose of recruiting persons for employment on his own behalf. This category of agencies cover all employees hired by an employer solely for the purpose of recruiting staff for him. The Administration therefore considers the proposal to extend the definition of employment agency to cover "middlemen" not feasible because this will inadvertently change the status of those employees assisting their employers to recruit staff into employment agencies, and require them to apply for an employment agency licence. This will have serious implications, which will render the proposal not worth pursuing.

15. The Panel also recommends that the Government should maintain a closer working relationship with the relevant authorities, including other labour exporting countries, to bring about a better understanding of the problems encountered in the implementation of the SLIS Scheme and to facilitate the formulation of measures to address the problems. The Government has, through its liaison efforts, built up a close rapport with authorities of the labour exporting countries over the regulation of the labour exportation activities, so that any problem can be resolved promptly through co-operation. For PRC workers in particular, the Chinese government has agreed to strengthen control over their labour service companies (LSCs). The Chinese government is also positively considering to have these companies registered as employment agencies under the Employment Ordinance and to restrict the approval of overseas employment to only those Chinese workers who were recruited through authorised labour service companies. The Administration is pleased to note that the Panel has also recognised the merits of these efforts. We will keep up our efforts.

Quota Ceiling

16. The Panel has made several references to the difference between the quota ceiling and the actual number of imported workers working for the new airport and related projects, considering that this difference has given a wrong signal to works agents and contractors that applications for quotas to import workers will most likely be approved in full. In fact, the quota ceiling was computed on the basis of the estimated shortfall of local construction workers relative to the demand for them at the peak of the construction works of the new airport and related projects. This ceiling therefore serves only to control the maximum number of approved quotas at any one time. It is not a target number of imported workers which we aim to reach over the entire period. The actual control of the quotas allocated to individual contractors is through the process of vetting each individual application. This can be proved by the fact that as at 30 September 1996, 4,542 from a total of 32,500 quota applications were refused on various grounds despite the existence of unused quotas ever since the commencement of this SLIS. We will continue to ensure through our liaison channels with contractors who wish to apply for quotas under the SLIS that they are aware of the fact that the control of the number of quotas allocated lies in the assessment of individual applications.

17. The Panel recommends that instead of setting a ceiling for an unlimited period, the Administration should consider a quarter-by-quarter ceiling, to be reviewed once every six months. In each review, the Government Economist should provide an up-to-date quarter-by-quarter analysis of the local labour supply and the demand for the various types of construction workers in the next two to three years. The Administration agrees that it should review the manpower requirements of the new airport and related projects from time to time. In this connection, we will conduct a review of the overall manpower requirements of the construction industry including the new airport and related projects. The results will be available by the end of the year and these will form the basis of our assessment of the utilisation of the quotas under the SLIS. However, the projection of the manpower requirements carried out by the Government Economist will only relate to the annual balance in respect of the total number of building and construction workers without any breakdown by type. The reasons are that since the statistics on both the employment and supply of construction site workers by type or skill level are not available, projection of the balance of demand for and supply of construction site workers can only be made at the overall level. As regards the projection of demand for construction site workers, this cannot be done on a quarter-by-quarter basis since the quarterly projections of the private sector and public sector expenditures on building and construction are not available. Moreover, technically speaking, quarterly expenditures on building and construction usually exhibit a high degree of fluctuation and the projection of their future quarterly movements will be subject to a wide margin of error.

Vetting Mechanism in processing quota applications

18. Under the existing mechanism of the SLIS, the Secretary for Education and Manpower(SEM) is the authority for approving quota applications based on the ‘collective advice’ of an inter-departmental Liaison Group comprising the Immigration Department, NAPCO, Labour Department and Census & Statistics Department.

19. The Panel recommends that the responsibilities of the SEM and the Director of Immigration in overseeing and implementing the SLIS should be clearly defined, so as to avoid confusion. The Administration’s view is that the respective responsibilities of SEM and Director of Immigration (D of Imm) are already very clear. D of Imm is the ‘convenor’ of the inter-departmental liaison group, and is responsible for co-ordinating the views of members of the Liaison Group before making recommendations on individual applications to the SEM, who is the ‘approving authority’. Moreover, the SEM’s approval of a quota means in effect the approval of an employer’s application to import a worker to fill a particular post. The Director of Immigration still has full discretion under the Immigration Ordinance to consider whether the visa application of any particular imported worker filling the quota in question should be approved.

20. The Panel also recommends that the Administration should review if the authority to approve quotas should more appropriately be given to an executive department, e.g. the Labour Department, so as to distance the Secretary from the day-to-day processing of applications and maintaining his neutrality in overseeing the implementation of the Scheme. The Administration, however, considers that the existing system whereby the Liaison Group proposes and the SEM disposes is appropriate in maintaining the necessary checks and balances in the system, as members of the Liaison Group have different roles to play:

NAPCO: to check whether the number, types and duration of employment of the imported workers applied for are compatible with the nature of the works contract in question;

Labour Department: to facilitate the recruitment of local workers through job matching and to assess whether the employer has made genuine efforts in recruiting local workers;

Census & Statistics Department: to advise whether the wages offered in respect of the vacancies are not below the median monthly wages of local workers in comparable positions;

Immigration Department: to receive quota applications and co-ordinate views of all Liaison Group members for recommendation to the SEM at the quota application stage; and to examine applications and approve visas for individual imported workers at the visa application stage.

None of the Members should be made the approving authority because they have distinctively different roles to perform in the vetting process. The SEM, who is not represented on the Liaison Group, is in the best position to take an objective view of an individual application.

21. The Panel has found that NAPCO was unable to comment on the quota applications effectively since it relied only on the principal contractors to provide information. The Administration agrees that there is room for improvement in this aspect of the vetting mechanism. In fact, from February 1996 onwards, NAPCO has extended the vetting process from the principal contracts to the subcontracts level, by asking the Principal Contractors and works agents to advise on the labour requirements in sub-contractors’ applications. Through this process, NAPCO has since been provided with details such as contract value, duration, and nature of subcontract works for the purpose of making a more accurate assessment of the manpower needs of the subcontractors. With this improvement, NAPCO has been able to identify any excessive bids from main contractors and subcontractors at the time of their application.

22. The Panel recommends that NAPCO should take a more active approach in assessing the manpower needs for completing the new airport and related projects, and so it should keep a complete record of the manpower requirements of each of the main contracts and the sub-contracted works, and should provide the percentages of imported workers engaged by the principal contractor and sub-contractor concerned in the main works contract and the sub-contract (with breakdowns by work types) in forwarding its comments to the approving authority. It further recommends that NAPCO, instead of sitting on the Liaison Group to give advice, should be the first ‘stop’ in receiving applications, i.e. it should first vet the applications and consider whether it should give its support, before the applications go to the approving authority. The Administration agrees that applications should first be vetted by NAPCO to ensure that only those quota applications for imported workers whose number, type and duration of employment are compatible with the nature and manpower requirements of the works contracts would be processed further. We also agree that NAPCO should keep a record of the manpower requirements of the principal contractors. NAPCO will also obtain information on the manpower requirements of the sub-contractors of each works contract by asking contractors applying for imported labour to furnish such information. NAPCO also provides information obtained from contractors about the percentage share of imported workers employed by the principal contractor and sub-contractor under the works contracts in question when submitting their comments on any quota applications to the Liaison Group. However, since the advice on whether the number, type and duration of employment of workers are compatible with the nature and manpower requirements of the relevant works contracts is an essential part of the collective advice from the Liaison Group which SEM has to take into account in deciding whether to approve each application, it is imperative that NAPCO should remain on the Liaison Group.

The proposal to involve third parties in the formulation of policies and monitoring of implementation of the SLIS

23. The Panel recommends that there should be an independent committee to advise the relevant Policy Secretary on the overall policy on, and issues relating to, the implementation of the importation of labour schemes. This committee should integrate the separate functions undertaken by different bodies with the objectives of providing the necessary manpower resources to meet Hong Kong’s labour demands while ensuring that local workers’ interests would not be jeopardised by importation of labour. It will also be involved in reviewing the yardsticks in determining the quota ceiling and in monitoring the appropriateness of the ceiling. If necessary, the committee may conduct random checking of the vetting process and advise on how the procedures could be streamlined or tightened up.

24. The Administration fully appreciates the good intentions underlying this proposal. However, we do not see the need for an independent committee to oversee the overall policy on, and issues relating to, the implementation of the importation of labour schemes. This is because the existing system is operating in a smooth and transparent manner. There are also adequate channels for both employers, trade unions, LegCo members and all other concerned parties to directly convey their views to the Government. Furthermore, as a matter of practice, the Government consults widely on any major changes to the schemes.

25. As regards the need to provide the appropriate manpower resources to cope with the demands of the labour market in a well-coordinated manner, it has in fact long been Government’s manpower policy to ensure that Hong Kong has a workforce which is equipped with the requisite skills and expertise to meet the demands of the economy, and to contribute to Hong Kong’s overall economic competitiveness. In line with this policy, we are finalising two comprehensive reviews of our vocational education system and the Employees Retraining Scheme respectively. These reviews will enable us to formulate our long-term manpower planning, training and retraining strategy well into the next century. The Administration will consult all concerned parties and the Manpower Panel before deciding on the way ahead.

Conclusion

26. The Administration will continue to work closely with the Panel and all other concerned parties to ensure that the SLIS is effective in meeting its policy objectives.

Education and Manpower Branch
October 1996

Last Updated on 21 August 1998