Panel on Manpower (Minutes) 22 Dec 97

Provisional Legislative Council

PLC Paper No. CB(1)803
(These minutes have been
seen by the Administration)

Ref : CB1/PL/MP

Panel on Manpower

Minutes of Meeting held on Monday, 22 December 1997, at 2:30 p.m. in the Chamber of the Legislative Council Building

Members present :

Hon CHAN Kam-lam (Chairman)
Hon Mrs Sophie LEUNG LAU Yau-fun, JP(Deputy Chairman)
Hon WONG Siu-yee
Hon HO Sai-chu, JP
Hon LEE Kai-ming
Hon Mrs Peggy LAM, JP
Hon CHAN Yuen-han
Hon CHAN Wing-chan
Hon Ambrose LAU Hon-chuen, JP
Hon CHENG Yiu-tong
Dr Hon LAW Cheung-kwok
Hon TAM Yiu-chung, JP

Member attending :

Hon Howard YOUNG, JP

Members absent :

Hon James TIEN Pei-chun, JP
Hon Henry TANG Ying-yen, JP
Hon Ronald ARCULLI, JP
Dr Hon Mrs TSO WONG Man-yin
Hon MOK Ying-fan
Hon Frederick FUNG Kin-kee
Dr Hon Philip WONG Yu-hong
Hon Bruce LIU Sing-lee

Public officers attending :

For all items

Mr Matthew CHEUNG: Deputy Secretary for Education and Manpower
Ms Esther LEUNG: Principal Assistant Secretary for Education and Manpower

For Item V

Mr Joseph W P WONG: Secretary for Education and Manpower
Miss J A Willis: Commissioner for Labour
Mrs Jennie CHOR: Assistant Commissioner for Labour
Mr K Y TANG: Government Economist

Clerk in attendance :

Miss Polly YEUNG: Chief Assistant Secretary (1)3

Staff in attendance :

Ms Sarah YUEN: Senior Assistant Secretary (1)4

I.Confirmation of minutes of meetings and matters arising

(PLC Paper Nos. CB(1)448 and 467)

The minutes of the meetings held on 9 and 27 October 1997 were confirmed.

II.Date and items for discussion for next meeting

2.Members agreed to advance the January meeting of the Panel to Wednesday, 21 January 1998, at 8:30 am. They also agreed to continue discussion on the results of the Review on the Supplementary Labour Scheme (SLS) and the review on manpower needs for the construction and textiles and clothing industries.

III.Information papers issued since last meeting

(PLC Paper Nos. CB(1)523,559,574,591 and 633)

3.Members noted that five papers had been issued for their general information since the last meeting.

IV.Proposed arrangements for general holidays

(PLC Paper Nos. CB(1)537 and 680)

4.For the purpose of clarifying the Administration's proposed arrangements for general and statutory holidays, the Deputy Secretary for Education and Manpower (DS/E&M) highlighted the following points :-

While it had been agreed that 1 May and the Buddha's Birthday would be designated as new general holidays, it was the Administration's policy intent that the total number of general holidays in Hong Kong should remain at 17 days a year. As a result, the new holidays would need to be offset by the deletion of two of the existing six general holidays which were not also statutory holidays. Public views were presently sought on this issue.
As a result of the inclusion of 1 May, the number of statutory holidays would rise from 11 to 12 days in 1999.

5.On the appropriateness of capping the total number of general holidays at 17 days a year, the DS/E&M pointed out that Hong Kong compared much more favourably than neighbouring countries as far as general holidays were concerned. He cited the examples of Japan, South Korea, Malaysia, Singapore, China and Australia where the number of general holidays ranged from 7 to 16.

The Administration was of the view that it might not be appropriate to increase the number of Hong Kong's general holidays, lest Hong Kong's economic competitiveness might be affected. Mr HO Sai-chu shared the Administration's view.

6.Members did not make any specific proposal on which general holidays should be deleted. Some members, however, pointed out that the public's preference for long weekends or several holidays in a row should be catered for. Others highlighted the need for an even spread of holidays throughout the year. The DS/E&M advised that the Administration was in the course of consulting employer and employee organisations, as well as the religious and financial services sectors. Members were assured that the Administration would consider public views carefully before reaching a decision.

V.Results of the Review on the Supplementary Labour Scheme and the review on manpower needs for the construction and textiles and clothing industries

(Information package from the Administration tabled at the meeting and issued to all PLC Members thereafter by general despatch)

7.The Secretary for Education and Manpower (SEM) and the DS/E&M briefed members on the information package provided by the Administration. Members noted that in anticipation of the high demand for labour in the building and construction industry as a result of the Government's commitment to build not less than 85,000 flats a year and the implementation of related infrastructural projects, the Government had conducted the Study on the Labour Requirement of the Construction Industry 1997-2002 (the Study) and formulated a two-pronged strategy to meet the substantial labour requirements. The strategy, endorsed broadly by the Executive Council on 9 December 1997, included an expanded training and retraining programme and a proposal to launch a Construction Labour Importation Scheme (CLIS) on 2 March 1998 as a safety valve to ease any bottleneck in labour supply if local workers were genuinely not available to fill the vacancies.

Results of the Study

8.Referring to the results of the Study, SEM drew members attention to the following -

The projected supply had not taken into account natural wastage, new entrants other than those from the training bodies and any future changes in the capacity of the training/retraining programme provided by the relevant training organisations. Owing to the volatile nature of the industry and the difficulty in estimating movements between trades, the Administration had not attempted to project the total supply by trade type.
The projected net requirement was only the likely demand to be satisfied. It must not be interpreted as the target number of workers to be imported under the CLIS. The Administration's prime aim was to meet the demand as far as possible by training and retraining of local workers.

9.Referring to the discrepancy between the projected requirement of 27,000 imported workers and the actual number of imported workers of some 5,000 to 6,000 under the Special Labour Importation Scheme (the Special Scheme) for the new airport and related projects, members cast doubt on the reliability of the results of the Study. Some members drew the Administration's attention to the problem of under-employment reported by some construction workers and urged the Administration to exercise care in analysing the actual situation. Other members opined that the Administration had failed to take note of the effect of salary increase and technology development on supply and demand. A member further said that to ensure acceptance of the results, the Working Group which conducted the Study should have included representatives from the industry.

10. Accounting for the discrepancy between the projected and actual number of workers imported under the Special Scheme, the Government Economist (GE) explained that a slow-down of the property market at that time had made available a greater supply of local workers to take up work for the airport project. Mr HO Sai-chu also advised that the use of new technology in the new airport project might not be applicable to housing production. Some members however held the view that as a result of recent adjustments in the property market, there would be an adequate supply of local workers.

11.In response, the DS/E&M emphasised that in assessing the requirement for labour in the construction industry over the next five years, the Working Group had also sought advice from the Hong Kong Construction Association (HKCA), the Hong Kong Electrical and Mechanical Contractors Association, the Real Estate Developers Association, the Kowloon-Canton Railway Corporation, the Mass Transit Railway Corporation, and the Hong Kong Federation of Trade Unions. He supplemented that the Study had been conducted with input from all relevant parties, having regard to all relevant factors including pay rise and technology development. Commenting on the effect of pay rise on manpower supply, the Administration pointed out that past experience had shown that some of the more specialised trades still failed to secure enough supply of workers despite a significant pay rise of 30%.

Justification for the CLIS

12. Some members agreed that as long as local workers would be given priority in filling job vacancies, employers who were genuinely unable to recruit local workers should be allowed to import workers to fill their vacancies. Some members, however, raised strong objection to the CLIS for the following reasons : -

The CLIS was unnecessary as there was already the SLS, under which employers could also apply for the importation of construction workers.
The CLIS was untimely given the prevailing economic recession and rising unemployment. Instead of embarking on a new labour importation scheme, the Administration should gear up training and retraining to absorb as many local workers into the industry as practicable.
There should be enough local supply if the Administration could step up efforts to improve the employment conditions of the construction industry so as to reduce wastage and to attract new entrants.
The introduction of the CLIS was against the principles of free economy and would disrupt the working of natural market forces to regulate supply and demand. The CLIS would only have the effect of keeping wages down for local workers.

13.On the need for the CLIS to operate alongside the SLS, members noted that upon introduction of the CLIS, all applications for imported workers for the construction and electrical trades would be excluded from the SLS to ensure that there would not be any duplication.

14. The DS/E&M emphasised that it was the Government's objective to meet the increasing labour demand through the training and retraining of local workers as far as possible. The quadrilateral Working Group on Training and Retraining for the Construction Industry (the Quadrilateral Working Group) was set up in August 1997 with the objective of identifying how best to expand the current training capacity for the industry and to enhance the current training and retraining programmes so as to proactively respond to the industry's changing needs.

15. Members noted that under an expanded, continuous and flexible training and retraining programme for local workers to be mounted jointly by the Government, the Construction Industry Training Authority (CITA), the Vocational Training Council (VTC) and the Employees Retraining Board (ERB), the CITA had agreed to consider how best to provide multi-skilling for its trainees to enhance their employability. In anticipation of a higher growth in labour requirement in the trade group of "labourer", the VTC had also designed a one-week training course to train up new arrivals from the Mainland and adult workers prepared to join the construction industry.

16. The Administration agreed with members that the building boom over the following decade would be a good opportunity to bring about improvements and increase job opportunities in the industry. The Administration advised that improvement measures under consideration by the Quadrilateral Working Group included encouraging contractors to offer employment on monthly wages or on fixed-term contract and improving work safety and working conditions. Members noted that at the request of the Quadrilateral Working Group, the HKCA was already examining the recommended improvements. The Quadrilateral Working Group would continue to pursue the matter.

Admin.

17.In this regard, some members suggested that as Hong Kong's largest public housing supplier, the Housing Authority (HA) should consider taking the lead in requiring contractors of HA's building projects to employ local construction workers, or at least a specified percentage of these workers, on monthly pay or fixed-term contract basis. The Administration agreed to study the feasibility of this proposal.

18.Where market forces were concerned, the GE stressed that the CLIS would not be resorted to until all efforts to satisfy demand had been exhausted. This was considered a valid proof that the Administration would allow full play to market forces. He further pointed out that the planned housing and infrastructural projects would benefit Hong Kong's economy in the long run and their smooth implementation should not be impeded by inadequate manpower supply.

Ensuring priority of employment for local workers

19.To further assure members that the CLIS would not affect local workers employment opportunities, the DS/E&M emphasised that the CLIS was essentially a short to medium term arrangement and would be subject to annual review. When Hong Kong had trained up enough skilled workers, the CLIS would be phased out. He reiterated the Administration's strict adherence to its stated policy of ensuring priority of employment for local workers by means of the Intermediate Trade Test, the specified local recruitment period and centralised publicity on job vacancies and training opportunities.

2. 20.On the purpose of the Intermediate Trade Test, the Administration clarified that the Test was not intended to pose a hurdle to bar local workers from entering the industry, but to provide an additional channel to enable local construction workers to demonstrate that they possessed the necessary skills. In effect, this would amount to a safeguard as employers would have to take on all local workers who had passed the test before they would be allowed to use the CLIS. In the long run, this voluntary test system would also have the effect of enhancing the skill level of local construction workers.

21.Members were wary of the intention behind the reduction of the specified local recruitment period form eight weeks under the SLS to two weeks under the CLIS and opined that it might be a move to open the way for large-scale labour importation. In response, DS/E&M advised that a shortened recruitment period was necessary due to the tight schedule for the planned housing and infrastructural projects.

Safeguards against abuse

22.To address members concern about possible abuse of the CLIS by unscrupulous employers, the Commissioner for Labour elaborated the application procedures. Before contractors were allowed to import workers under the CLIS, they would have to employ all those workers for the relevant trade types on the register of workers who had passed the Intermediate Trade Test and those local workers referred by the Labour Department who were qualified for the relevant job vacancies, or at least prove that they had genuinely offered them a job. Should any employer refuse without valid reason to employ a trade-tested worker, or a qualified worker referred to him, for a trade he later applied for imported workers, his application would not be considered.

23.The DS/E&M added that to prevent abuse, every application under the CLIS would be considered on its own merits and vetted by an inter-departmental committee. Moreover, the principal contractor would have to sign a standard Deed of Undertaking and be held jointly and severally liable for the liability of all his sub-contractors over the imported workers employed by them. This measure would help to prevent exploitation of foreign workers. At members request, the Administration agreed to consider the suggestion of involving the Labour Advisory Board in the vetting committee.

Admin.

24.In conclusion, SEM stressed that while the anticipated labour requirement in the construction industry over the next few years should be met as far as practicable by local supply to be boosted through the various efforts described above, the need to import labour to meet any shortfall could not be ruled out. As such, it was a responsible move on the part of the Government to remain forward-looking and introduce the CLIS. In reply to members, he also confirmed that the Executive Council had already endorsed the need to establish the CLIS as a safety mechanism and public views were being sought on details of its implementation. The results of public consultation would be reported to the Executive Council in February 1998. He advised that the Administration would provide adequate resources to the Labour Department and the Immigration Department for the effective implementation of the CLIS.

25.Concluding the discussion, the Chairman urged the Administration to consider members' views carefully before finalising the way forward.

26.The meeting ended at 4:50 pm.

Provisional Legislative Council Secretariat
15 January 1998