Legislative Council

LC Paper No. CB(2) 1152/98-99
(These minutes have been seen by
the Administration)

Ref : CB2/PL/MP/1

LegCo Panel on Manpower

Minutes of meeting held on Thursday, 26 November 1998 at 2:30 pm in the Chamber of the Legislative Council Building

Members present:

Hon LEE Kai-ming, JP (Chairman)
Hon LAU Chin-shek, JP (Deputy Chairman)
Hon Kenneth TING Woo-shou, JP
Hon James TIEN Pei-chun, JP
Hon HO Sai-chu, JP
Hon Michael HO Mun-ka
Hon LEE Cheuk-yan
Hon Ronald ARCULLI, JP
Hon CHAN Kwok-keung
Hon CHAN Wing-chan
Hon CHAN Kam-lam
Dr Hon LEONG Che-hung, JP
Hon LEUNG Yiu-chung
Hon SIN Chung-kai
Hon Andrew CHENG Kar-foo

Members absent:

Hon David CHU Yu-lin
Dr Hon LUI Ming-wah, JP
Hon CHAN Yuen-han
Hon SZETO Wah

Public Officers attending:

Item III

Mr Joseph W P WONG, JP

Secretary for Education and Manpower

Mr Matthew K C CHEUNG, JP

Deputy Secretary for Education and Manpower

Ms Esther LEUNG

Principal Assistant Secretary for Education and Manpower

Mrs Clare SIU

Acting Assistant Commissioner for Labour
(Employment Services)

Item IV

Mr Joseph W P WONG, JP

Secretary for Education and Manpower

Mr Matthew K C CHEUNG, JP

Deputy Secretary for Education and Manpower

Ms Esther LEUNG

Principle Assistant Secretary for Education and Manpower

Mr TSANG Kin-woo, JP

Assistant Commissioner for Labour (Labour Relations)

Item V

Mr Matthew K C CHEUNG, JP

Deputy Secretary for Education and Manpower

Ms Esther LEUNG

Principle Assistant Secretary for Education and Manpower

Clerk in attendance:

Mrs Sharon TONG

Chief Assistant Secretary (2)1

Staff in attendance:

Ms Lolita NG

Senior Assistant Secretary (2) 5

I. Confirmation of minutes of meeting held on 12 October 1998
(LC Paper No. CB(2) 650/98-99)

The minutes were confirmed.

II. Date of next meeting and items for discussion
(LC Paper No. CB(2) 707/98-99(01))

2. The Chairman suggested and members agreed that the meeting originally scheduled for 24 December 1998 be rescheduled to Wednesday, 23 December 1998 at 2:30 pm.

3. Members noted that the Member's bill on age discrimination to be introduced by Hon LAU Chin-shek would be further deferred because the Administration was clarfiying the bill with Mr LAU Chin-shek.

4. The Panel decided to discuss the following items at the next meeting on 23 December 1998 :

1. Progress of measures to create jobs and tackle unemployment;

2. Update on manpower and job creation assessment; and

3. The right of workers to go on strikes or take industrial actions.

(Post-meeting note: At the request of the Administration, items (b) and (c) were replaced by "Proposed amendments to the Protection of Wages on Insolvency Ordinance" and "Employees Retraining Board: the way forward" respectively. The items were deferred to the meeting on 28 January 1999.)

5. Mr LEE Cheuk-yan said that as resolved by the International Labour Organisation, the SAR Government had contravened the International Labour Convention because of its repeal of the Employee's Rights to Representation, Consultation and Collective Bargaining Ordinance, the Employment (Amendment)(No. 4) Ordinance 1997 and amendments to the Trade Unions (Amendment)(No.2) Ordinance 1997 in October 1997. He suggested and members agreed to discuss, in the context of a review on re-instatement, the Administration's response to the report by the International Labour Organisation.

6. The Secretary for Education and Manpower (SEM) responded that in the Administration's view, the SAR Government had not contravened the International Labour Convention. The Administration was seeking legal advice on the matter and would respond to the report by the International Labour Organization.

7. On item at para. 4(c) above, Mr CHAN Wing-chan was concerned about whether the Government would legislate for workers' right to go on strikes and take industrial actions. Referring to Article 27 of the Basic Law which set out workers' right and freedom to go on strikes, the Chairman asked whether the Administration would consider amending the Employment Ordinance accordingly. In response, SEM said that the Administration was awaiting legal advice on the matter and agreed to inform the Panel of the legal advice when the matter was discussed.

III. Progress of measures to create jobs and tackle unemployment
(LC Paper no. CB(2) 707/98-99(02))

8. SEM said that the present unemployment rate was 5.3%. The unemployment problem was serious in certain trades, especially the construction sector. He anticipated that the unemployment rate would be on the high side in the coming months. However, one should not be pessimistic of the future of Hong Kong's economy, given some positive signs such as improvement of the external economic factors, lowering of the interest rate, stabilization of the property price and increasing public confidence in the local economy.

9. At the request of the Chairman, SEM highlighted the progress of the measures adopted by the Task force on Employment as follows -

1. The Government would produce a comprehensive update on job creation assessment by the end of 1998, taking into account the initiatives and commitments announced in the 1998 Policy Address;

2. There was a new venture to allocate a particular site with an appropriate area of 20 000 square metres to the south of the former Kai Tak Airport Terminal Building to a non-government organisation (NGO) for operating a flea market on a non-profit-making basis, as a pilot project, during weekends and public holidays for three to six months, from early January 1999 onwards. The Administration was drawing up the detailed land allocation arrangements and eligibility criteria and would invite proposals from NGOs next week. Only dry goods would be allowed while faked products would be prohibited in the flea market. Only nominal fees would be charged by the NGO for basic operation and maintenance of the flea market;

3. As a new venture, the Administration would implement three community building projects on promotion of private building management and fire safety and survey on the housing condition of new arrivals from 1 December 1998 to 31 March 1999. The projects would create 3 590 new jobs for Temporary Community Organisers and the recruitment exercise would start by the end of November 1998; and

4. All other items of the measures were able to achieve the intended objectives.

10. Referring to items 6 and 17 of the information paper, Mr CHAN Wing-chan enquired about an estimate on the jobs to be created by the flea market and the present conditions of the domestic helper posts which were filled under the retraining-cum-job matching programmes under the Employees Retraining Board (ERB).

11. SEM said that an estimate about 1 000 persons would be employed if and when the flea market came into existence. As regards domestic helper posts, SEM pointed out that there was a market for part-time domestic helpers in Hong Kong. ERB would continue running training courses and stepping up publicity to help trainees to secure employment as domestic helpers. Deputy Secretary for Education and Manpower (DSEM) added that ERB had issued a market flyer in late October 1998 and an announcement of Public Interest on Employees Retraining Scheme with a special focus on domestic helpers training had been featuring on television since mid-October 1998. ERB would also strengthen its liaison work in the community. While the training of domestic helpers modelling on a hotel was favoured by employers, there existed a problem in matching domestic helpers with employers. There was a strong demand for the service in Hong Kong East, however, a large number of the trainees who had joined the retraining-cum-job matching programmes for domestic helpers were living in Kowloon. The Administration would further examine and iron out the problem in conjunction with ERB.

12. Mr Michael HO asked why more than 700 vacancies of domestic helpers could not be filled in Hong Kong East. DSEM explained that the working hours preferred by the domestic helpers could not match with and meet the employers' requirements and that the physical distance and transport expenses discouraged many domestic helpers living in Kowloon to travel to and work in Hong Kong Island.

13. DSEM added that in order to solve the matching problem, efforts would be made to step up publicity of the retraining-cum-job matching programmes for domestic helpers in Hong Kong East so that more people living in the region, e.g. in Chai Wan and Siu Sai Wan, could be retrained and would fill the vacancies of domestic helpers in Hong Kong East. In this connection, Mr HO Sai-chu suggested the labour unions to help promote the retraining-cum-job matching programme with a view to encouraging job seekers living in Hong Kong East to receive retraining and work as domestic helpers afterwards.

14. Mr Michael HO considered that the wage level of full-time domestic helpers would affect the job opportunities of part-time domestic helpers. In response, SEM said that the Administration had an annual review on wages of foreign domestic helpers, with consideration given to the wage level, trend of wages, the local economy, etc. The Administration would keep the Panel informed of the result after the review was completed.

Adm

15. Mr Michael HO asked whether the Administration would also review the general policy relating to foreign domestic helpers. SEM said that there had not been a comparison between the wage levels of foreign domestic helpers and local part-time domestic helpers. Local part-time domestic helpers just worked on a part-time basis and without fixed salaries. Furthermore, the foreign domestic helpers (about 170 000 ) in Hong Kong had outnumbered the local part-time domestic helpers. In the view of the Administration, there were very few live-in local domestic helpers. It would be more pertinent, among other things, to make comparison with the wages of local workers of comparable service for review purpose.

16. As regards the flea market, Mr CHAN Wing-chan enquired about its progress. Mr James TIEN questioned if the Administration had consulted the retail sector about the flea market. He asked whether the Administration would publicize the flea market with a view to attracting those who went to Shenzhen for shopping. Mr LEE Cheuk-yan queried the objective of the flea market and its management by a NGO. He wondered if the unemployed could obtain jobs in the proposed flea market and suggested that some areas be opened for hawking instead. Mr Andrew CHENG and Mr LEUNG Yiu-chung cast doubt on the effectiveness of the proposed flea market in helping the unemployed to secure employment.

17. In response to members' questions on the flea market in para.16 above, SEM made the followng points -

1. The Administration would invite NGOs to submit proposals in late November 1998. Publicity would probably be conducted next week. A working group would be set up to process applications and the result would be known in late December 1998 or early 1999;
   
   
2. The Administration had consulted the retail sector unofficially. There would be publicity to promote the flea market, emphasizing its merits. In order not to increase competition in the retail sector, the flea market would be operated during weekends and public holidays only. The Administration hoped that some unemployed persons could obtain temporary jobs upon implementation of the project;
   
   
3. In considering the hawking problem, the Administration needed to take the environmental and hygiene factors seriously. Moreover, it would be difficult to stop illegal hawking after more areas were opened for such purpose. On the other hand, the flea market was a project with a life span of three to six months. A NGO was to operate and maintain the flea market on a non-profit-making basis and the fee charge would just be sufficient for its administration and management. It is hoped that stall-operators could get profits eventually; and
   
   
4. The Administration would examine proposals from NGOs, including the proposed financial statement on income and expenditure to ensure that the selected NGO would run the flea market on a non-profit-making basis. The Administration did not intend to intervene in the operational details such as allocation of the stalls and whether the unemployed were recruited for operation of the stalls.

DSEM supplemented that the pilot project fostered community participation which was also a mobilizing force for the project.

18. Mr LEUNG Yiu-chung questioned as to how the unemployment problem of the unskilled workers would be tackled by the Administration. He suggested that additional jobs such as domestic helpers and caretakers be created in the public sector. SEM pointed out that the unemployment problem reflected the current state of local economy. The package of measures could not solve the problem of rising employment until the economy revived. They aimed to alleviate the extent of problem. A rise in the unemployment rate did not necessarily imply that the measures adopted by the Administration were not effective to ease individual's unemployment problem. Before making proposals to create jobs, the Administration needed to consider the financial resources in the public sector and other factors such as the enhanced productivity scheme. Jobs would be created with consideration given to their functions, need and usefulness. The Labour Department (LD) had been providing employment and job matching services to help the unemployed, including unskilled workers, to secure employment. ERB was conducting retraining programmes and would organise additional courses if necessary.

19. Mr LEUNG Yiu-chung commented that given the restriction on the Comprehensive Social Security Assistance Scheme, it would be more difficult for the unemployed to meet the basic cost of living. SEM advised that the view would be conveyed to the Health and Welfare Bureau for its reference.

Adm

20. Mr HO Sai-chu anticipated that there would be more unemployment in the construction trade. He commented that the Government's speed of processing contractors' applications for the infrastructural projects was slow. Pertaining to the community building projects, he was of the view that the projects would not be useful to help ease the unemployment problem as only temporary jobs were created for three months.

21. SEM's response was as follows -

1. A rising unemployment rate in the construction trade was largely due to a drop in private development projects. The Administration would continue to expedite the construction projects in the public sector; and
   
   
2. The community building projects were short-term ones, hence creating temporary jobs only. Nevertheless, the projects would be useful. In particular, the data collected by the survey on the housing conditions of new arrivals would be of useful reference to the Government in policy planning and formulation.

22. Mr CHAN Kam-lam was concerned about the job opportunity of the trainees who were attending the seafarer training course as the course would end in mid December 1998. DSEM said that the trainees had performed well in the course and feedback from the maritime industry was good. Vocational Training Council was liaising with employers regarding placement of trainees. Such efforts would continue. Responding to a question raised by Mr LAU Chin-shek, DSEM advised that the cost for running the training programme was about $3 million a year. The monthly retraining allowance of $4 000 paid to each trainee during the classroom training period was funded by ERB. Each class could cater for 24 persons and more than 200 persons would be trained a year.

23. Referring to item 2 in p.10 of the information paper, Mr Kenneth TING urged the Administration to shoulder more financial responsibilities to help small and medium sized enterprises (SMEs). He said that when processing applications of the SMEs, the lending institutions always asked them to use their properties as collaterals and rejected the applications of those who were unable to do so. SEM undertook to convey the view to the Trade and Industry Bureau for its review of the Special Finance Scheme for SMEs in early 1999.

Adm

VI. Guidelines for handling wage reductions and retrenchment
(LC Paper No. CB(2) 707/98-99(03))

24. The Administration tabled at the meeting a pamphlet entitled "Guidelines on what to do in wage reductions and retrenchments are unavoidable" issued by LD.

(Posting-meeting note: The Administration also issued a synopsis on the above Guidelines for employees after the meeting. The pamphlet and the synopsis had been circulated to all LegCo Members. )

25. SEM said that the Guidelines aimed to encourage both employers and employees to discuss their problems frankly and rationally with a view to working out mutually acceptable solutions before wage reductions and retrenchment took place.

26. Mr LAU Chin-shek queried the effectiveness of the Guidelines in safeguarding employees' interest, such as in the recent labour dispute involving Hong Kong Telecom. SEM responded that in line with the spirit of the Guidelines, employers and employees should work closely with each other to overcome adversities when enterprises were facing severe business environment in the present economic climate. Employers could not change employment terms unilaterally and they had to consult their employees. Pressure from mass media, unions, etc. would deter employers, including those who were considered unscrupulous, from changing employment terms without their employees' consent. He further said that in accordance with the Labour Relations Ordinance (LRO), the Commissioner for Labour (C for L) might appoint a mediator to mediate in labour disputes. The Chief Executive in Council might, with the consent of the parties, refer a labour dispute to arbitration. Furthermore, a labour dispute could be referred to a board of inquiry.

27. In response to further question from Mr LAU Chin-shek, SEM said that it was not appropriate to comment on individual cases of wage reductions and retrenchments. It was important that there were discussions between employers and employees with a view to working out a solution mutually acceptable to both parties.

28. Responding to Mr LAU Chin-shek's further enquiry about labour disputes involving small companies, AC for L said that it was not advisable to regulate wage reductions and retrenchments by law. The Administration believed that it was important for employers and employees to hold discussions so that a solution mutually acceptable to both parties could be reached.

29. Mr CHAN Wing-chan conveyed the view of Miss CHAN Yuen-han that the Guidelines, which was not legally binding on the employers, were not useful in handling cases of wage reductions and retrenchments. She proposed that legislation be introduced to protect employees' rights.

30. AC for L said that since its endorsement by the Labour Advisory Board (LAB) and its issue in late October 1998, the Guidelines had positive feedback from different groups in the community, including human resource managers, employees, employers, scholars and mass media. The Guidelines had been working effectively. Telephone enquires on wage reductions and retrenchments had significantly dropped from 9 600 calls in August 1998 to 700 in November 1998 so far. Employers had generally been following the Guidelines before implementing wage reductions. In line with the Guidelines, more employers were prepared to hold frank and sincere discussions with their employees when considering whether wage reductions were to be introduced. In the case known to LD, all employers had given employees at least seven days to consider whether or not to accept their proposed wage reductions. Some employers had also arranged their senior staff to accept greater wage reductions in percentage terms than the general workforce.

31. Addressing to the point on legislation, AC for L reiterated that it was not advisable to introduce legislation to regulate wage reductions and retrenchments. Instead, efforts should be made to encourage joint discussions between employers and employees with a view to finding a solution mutually acceptable to both parties. He also undertook to follow up the cases raised by Miss CHAN Yuen-han.

Adm

32. Referring to the latest developments of the labour dispute involving Hong Kong Telecom, Mr LEE Cheuk-yan commented that the employer had contravened the spirit of the Guidelines. He asked whether the Administration would arbitrate the labour dispute. SEM reiterated that it was not appropriate to comment on individual cases of wage reductions and retrenchments. He recapitulated the existing mechanisms in which the Administration could play an active role in handling labour disputes in accordance with LRO in para. 26 above. In response to further enquiry from Mr LEE Cheuk-yan, SEM said that although the Administration had not exercised the authority as provided under LRO, it did not necessarily mean that the Administration would not exercise it when dealing with labour disputes arising from wage reductions and retrenchments.

33. Mr Andrew CHENG said that a member's bill would be introduced by the Democratic Party into the Legislative Council in order to safeguard employees' interests when wage reductions and retrenchments were initiated by employers. He asked for the Administration' comments on the matter and whether the member's bill, if introduced, would contravene Article 74 of the Basic Law. SEM said that the Administration would formulate its views after it had a chance to study it.

34. Referring to para. 1.3 of the Guidelines, Mr LEUNG Yiu-chung asked how the Administration could ensure that employers would be open and frank to discuss their business difficulties with employees. SEM said that notwithstanding exceptions, there were cases where employers and employees had jointly discussed the business difficulties to work out ways mutually acceptable to both parties, including calculation of severance payments (SP) basing on wages before the wage reductions. Responding to Mr LEUNG Yiu-chung's further question, SEM advised that in the present moment of economic downturn, it would be necessary and useful to provide employers and employees with the guidelines when wage reductions and retrenchments became unavoidable.

35. The Chairman was concerned about the effectiveness of the Guidelines in handling wage reduction cases where SP were involved. In the event that an employer and his employees had agreed to a wage reduction and that the employer went bankrupt after one year, he wondered whether SP would be calculated basing on the wages of the last month before the wage reduction. He also asked if the Guidelines were recognized by the Protection of Wages on Insolvency Fund and the Labour Tribunal. SEM said that the Administration would request the LAB and the Protection of Wages on Insolvency Fund Board to review the matter.

36. Mr James TIEN asked what measures had been taken by the Administration to encourage employers not to close down their business or initiate wage reductions and retrenchments in times of economic downturn. AC for L referred to para. 5 of the information paper highlighting the measures adopted by the Administration to publicize the Guidelines. He said that the Guidelines had been distributed to some 100 000 establishments with an employment size of five and above through the latest issue of LD's publication "Labour Focus".

V. Impact on existing employees and prospective employers upon change of franchise of public enterprise
(LC Paper No. CB (2) 707/98-99 (04))

37. Mr LAU Chin-shek was of the view that employees' interests should be safeguarded when franchise of public enterprise was changed. He queried why conditions could not be added as a requirement for the Government's tender to the effect that the employees be provided with the same posts and terms of employment after the change of the franchise. DSEM responded that the matter would be deliberated in depth by the LegCo Panel on Transport the next day and that he would convey the view to the Transport Bureau for its reference.

Adm

38. In response to further enquiry from Mr LAU Chin-shek, DSEM said that if any termination of franchises, or service licences gave rise to retrenchment or lay-off of employees working with an out-going franchise, licensee or service provider, the employer had to act in accordance with the Employment Ordinance. The Administration would also encourage the out-going franchise, licensee or service provider, as the employer, to hold sincere and frank discussions with affected employees with a view to working out mutually acceptable arrangements of non-statutory benefits. LD would provide retrenched staff with employment assistance while ERB organised a series of retraining courses and related services.

39. DSEM stressed that the Administration did not have any established rules or regulations on how employment-related matters arising from the termination or change of service licences or franchises in each individual case. Each case should be handled on its own merits. He further said that employment-related arrangements varied amongst different cases. In some cases, ex-gratia payments would be offered to affected employees. As regards priority of employment of displaced workers, the Administration might impose a requirement on the new service providers to make a first offer of employment to employees of the existing operator, as in the cases of the China Motor Bus and the Hong Kong Yaumati Ferry.

40. Noting the explanation by DSEM in paras. 38-39 above, Mr LAU Chin-shek did not agree that the interests of the affected employees could be safeguarded. He maintained that the Government should ask the new employer to provide the affected employees with similar posts and terms of employment when inviting tenders.

41. Mr LEE Cheuk-yan said that the affected employees would be in a disadvantageous position if they were just employed according to prevailing terms in the market. The Chairman said that the problem could be solved if the new employer recognized the years of experience of the affected employees.

42. Referring to the written submission from Hong Kong Tollways Employees Association Organizing Committee tabled at the meeting, Mr LEE Cheuk-yan made known the employment problems of those being affected. The Organizing Committee also asked the Government to set a condition in the tender that the new employer should employ the affected employees with the same salary in recognition of their years of experience.

43. DSEM reiterated that he would convey members' views to the Transport Bureau for its consideration.

44. There being no other business, the meeting ended at 4:40 pm.

Legislative Council Secretariat
21 January 1999