Legislative Council

LC Paper No. CB(2)2587/98-99
(These minutes have been seen
by the Administration)

Ref : CB2/PL/MP/1

LegCo Panel on Manpower

Minutes of meeting held on Thursday, 27 May 1999 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 LEE Cheuk-yan
Dr Hon LUI Ming-wah, JP
Hon Ronald ARCULLI, JP
Hon CHAN Kwok-keung
Hon CHAN Yuen-han
Hon CHAN Wing-chan
Hon CHAN Kam-lam
Hon SIN Chung-kai
Hon Andrew CHENG Kar-foo
Hon SZETO Wah

Members absent:

Hon David CHU Yu-lin
Hon Michael HO Mun-ka
Dr Hon LEONG Che-hung, JP
Hon LEUNG Yiu-chung

Public Officers attending:

Item III

Mr Philip K F CHOK
Deputy Secretary for Education and Manpower

Mr D C CHEUNG
Principal Assistant Secretary for Education
and Manpower (Acting)

Mr Matthew K C CHEUNG, JP
Commissioner for Labour

Mr TSANG Kin-woo, JP
Assistant Commissioner for Labour
(Labour Relations)

Item IV

Mr Philip K F CHOK
Deputy Secretary for Education and Manpower

Mr D C CHEUNG
Principal Assistant Secretary for Education
and Manpower (Acting)

Mr Matthew K C CHEUNG, JP
Commissioner for Labour

Mr CHOW Tung-shan
Assistant Commissioner for Labour
(Employment Services)

Mr TSANG Kin-woo, JP
Assistant Commissioner for Labour
(Labour Relations)

Mr S S KWONG
Executive Director
Employees Retraining Board

Item V

Mr Joseph W P WONG, JP
Secretary for Education and Manpower

Mr Philip K F CHOK
Deputy Secretary for Education and Manpower

Mr D C CHEUNG
Principal Assistant Secretary for Education
and Manpower (Acting)

Mr Matthew K C CHEUNG, JP
Commissioner for Labour

Mr TSANG Kin-woo, JP
Assistant Commissioner for Labour
(Labour Relations)
Clerk in attendance:
Mrs Sharon TONG
Chief Assistant Secretary (2)1
Staff in attendance:
Ms Eva LIU
Head, Research & Library Services
(Item III only)

Mr Jackie WU
Research Officer 1
(Item III only)

Mr Raymond LAM
Senior Assistant Secretary (2) 5
I. Confirmation of minutes of meetings held on 3 March 1999, 23 March 1999 and 22 April 1999 and matters arising
 (LC Paper Nos. CB(2) 1867/98-99, CB(2) 2024/98-99, CB(2) 2074/98-99 and CB(2) 2072/98-99(01))

The minutes of the meetings held on 3 March 1999, 23 March 1999 and 22 April 1999 were confirmed.

2. Members noted the list of follow-up actions required of the Administration (LC Paper No. CB(2) 2072/98-99(01)).

3. Members noted that funding for the Employees Retraining Board (ERB) was discussed at the Finance Committee meeting on 4 December 1998 and the Panel on Manpower was suggested to visit the training centres of ERB. ERB had subsequently invited members of the Panel to visit its training centres. Miss CHAN Yuen-han expressed support for the visit and suggested that a visit should also be made to the Vocational Training Council (VTC). Members agreed that visits would be made to ERB and VTC.

II. Date of next meeting and items for discussion
(LC Paper No. CB(2) 2072/98-99(02))

4. Members agreed to discuss the following items at the next meeting on 24 June 1999 :

  1. Draft Report of the Panel on Manpower for submission to the Legislative Council;

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

  3. Follow-up on elderly employment;

  4. Survey on age discrimination in relation to employment;

  5. Follow-up on right of workers to strike or take industrial actions; and

  6. Occupational health of persons working with computers.
(Post-meeting note : In view that there might be insufficient time for discussing all the items, the Chairman subsequently decided that the discussion of item (f) be deferred.)

On item (c), Miss CHAN Yuen-han requested the Administration to provide information on the employment situation of people aged between 40 and 60, and measures adopted by the Administration to address problems related to the employment of the elderly.Adm

III. Research Report on Minimum Wage Systems
(Research Report by the Research and Library Service Division of the Legislative Council Secretariat, supplementary information tabled and issued to absent members vide LC Paper No. CB(2) 2138/98-99)

5. The Chairman advised that while the Deputy Secretary for Education and Manpower (DSEM) had suggested before the meeting to defer discussion of the item until the Government Economist (GE), who was out of town, was back to Hong Kong, he had decided that the item would not be deferred since any issues raised could be referred to GE for a written response after the meeting.

6. At the invitation of the Chairman, Head, Research & Library Services (H(RL)) briefed members on the main findings in the Research Report on Minimum Wage Systems. She said that the Research and Library Services (RLS) Division of LegCo Secretariat had studied the experience of Australia, France, Japan, Mainland China, Singapore, South Korea, Taiwan, the United Kingdom (UK) and the United States (US), among which all except Singapore had minimum wage systems. Each place had its own minimum wage system tailored to meet its own socio-economic needs. In the places studied, there were arguments for and against a minimum wage system. The findings of empirical studies on the effects of minimum wage changes on the level of employment, poverty and income distribution were inconclusive. Hence, there was no consensus on the precise impact of a minimum wage.

7. H(RL) highlighted the following findings -

  1. On the exemptions under a minimum wage system and its applicability to foreign workers, it was noted that the minimum award system in Australia applied to all paid-workers. In US and France, the minimum wage systems did not cover professional employees. In Japan and Korea, apprentices and trainees were the major exemptions. In Taiwan, workers whose income was commission-based were excluded from the basic wage system. In Mainland China, local government could decide whether the minimum wage should apply to an enterprise established by a county/township. In the countries studied, disabled workers were generally not covered by minimum wage systems;

  2. In France, Taiwan, South Korea and Mainland China, the minimum wages were determined by the government. In US and UK, the minimum wages were determined by the legislature. In Australia, the Australian Industrial Relations Commission had the power to fix the minimum award rates. In Japan, the prefectural minimum wages councils determined regional minimum wages and different industrial committees determined the minimum wages for different industries;

  3. In Australia, France, Taiwan, Japan, South Korea and Mainland China, minimum wages were adjusted by the authorities on an annual basis. The adjustment in France was linked to the inflation rate;

  4. In France, UK, Taiwan, South Korea and Mainland China, labour unions played an important role in official advisory bodies on adjustment of minimum wages. Formal advisory bodies were not found in Australia, US or Japan;

  5. In the places studied, the criteria for determining minimum wages included workers' basic needs, the average wage, labour productivity, inflation rate, employment level, employers' profits and poverty line;

  6. It was observed that in the beginning of this century, different minimum wages were set down for different industries. Over the last few decades, setting an uniform rate across the board had become more popular;

  7. In the places studied, minimum wages were enforced by the labour authority. The penalties for failing to pay a minimum wage or submitting a false report to the enforcement agency varied among the places studied. In US and South Korea, failure to pay a minimum wage might result in imprisonment;

  8. In US, France and UK, the number of minimum wage workers were about 10% of the labour force. These minimum wage workers were mainly women, most of whom were engaged in industries such as textiles and clothing, restaurant service, retail trade, and personal care services;

  9. The minimum wage of young workers and trainees in Australia, US, France, Taiwan, South Korea and UK were about 70% to 90% of the minimum wage rates for adults; and

  10. The findings in respect of the minimum wages in the places studied were as follows :

    Country/
    Territory    		Minimum
    hourly
    wage    		Ratio of minimum
    wage to average
    wage
    France$53.159%
    Australia$48.8Not applicable
    United Kingdom$46.245%
    United States$39.942%
    Japan$38.442%
    Taiwan$15.245%
    South Korea$8.5438%
    China$1.46- $2.3430% - 45%
8. H(RL) pointed out that in considering whether to establish a minimum wage system, consideration was usually given to -(a) whether a minimum wage system would enable low wage workers to secure minimum living standards, overcome in-work poverty, increase the purchasing power of low wage workers, and encourage employers to improve efficiency/productivity; and(b) whether a minimum wage system would result in job losses, reduce wage rates in sectors not covered by the minimum wage system, affect competitiveness of the economy, and result in less on-the-job training.

9. Referring to Table 16 of the report, H(RL) informed members about the different minimum wage rates calculated on the basis of different percentages of the average wage. Members noted that the coverage for a minimum wage of $4,000 would be about 261 000 workers, while that for a minimum wage of $6,000 would be 483 700 workers. According to the Census and Statistics Department (C&SD), foreign domestic helpers had been included in the figures.

10. Miss CHAN Yuen-han enquired whether there were information on the number of economically inactive workers. Research Officer 1 (RO1) said that the figures were based on the findings of the General Household Survey, which only referred to employed persons, conducted by C&SD in the last quarter of 1998.

11. Mr LEE Cheuk-yan commented that some workers whose monthly income were above a certain level might work very long hours. Their hourly wage rate might be lower than the minimum hourly wage rate although their monthly wages were above the minimum monthly wage. To facilitate the estimation of number of minimum wage workers under different minimum wage levels, he suggested RLS Division to calculate the coverage at different minimum wage levels, taking into account the length of working hours. H(RL) undertook to gather the requested information.H(RL)

12. As regards the findings of the UK Low Pay Commission (UKLPC) on the socio-economic effects of the National Minimum Wage, RO1 said that the LPC had found that the impact of the national minimum wage could not be predicted precisely. He drew members' attention that the minimum wage system was only re-introduced in UK on 1 April 1999. UKLPC would review the impact of the minimum wage in late 1999. RLS Division would follow up the issue and report to the Panel.H(RL)

13. In response to Mr LEE Cheuk-yan, DSEM said that the Administration currently had no plans to establish a low pay commission in Hong Kong. Nevertheless, he would refer the issue to GE for examination. Mr SZETO Wah said that the Administration's reluctance to look into minimum wages reflected the need to establish a LPC in Hong Kong to look into the issue.Adm


14. Mr Andrew CHENG enquired whether the Administration would adopt a responsible attitude towards the protection of the low income group, given that the number of minimum wage workers only amounted to 10% of the labour force. DSEM responded that as GE was out of town, he was not in a position to provide an answer. He added that the Administration's position had been clearly spelt out at the Panel meeting in October 1998. Mr CHENG commented the Administration should take a positive and responsible attitude to examine in detail the issue of a minimum wage system in Hong Kong.

15. Mr James TIEN said that while the minimum wage in France was the highest among the places studied, its unemployment rate of about 12% to 15% was also the highest in Europe. He enquired whether there was information about the social security system in France and the effect of minimum wage on unemployment. Referring to paragraphs 9.20 to 9.23 of the Report, H(RL) said that researchers in France had divergent views on whether the minimum wage had a negative impact on employment. On the social security system in France, she referred to Table 12 and informed members that there were both unemployment insurance and unemployment assistance in France. Unemployment insurance, which was 60% of previous earnings, was available only to people who had made insurance contributions during a previous period of paid employment. Unemployment assistance in France was means-tested and independent of previous earnings and contributions. There was no limit to the period of receiving the benefit and the rate of benefit was in the range of FRF15,950 to FRF27,010 per year.

16. Mr LEE Cheuk-yan referred to paragraph 9.18 of the Report and said that according to a US Secretary of Labour, any negative employment effect would be slight and difficult to detect if the level of minimum wage was set within 50% or less of the average wage.

17. The Deputy Chairman said that Article 7 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) stipulated that the remuneration to workers should be sufficient for providing a decent living for the workers and their families. As the living of low income workers and their families were far from decent, he questioned whether the Administration had implemented the Article in Hong Kong. Mr LEE Cheuk-yan expressed dissatisfaction about the Administration's attitude towards minimum wages. He said that the Administration had not implemented Article 7 of ICESCR after its extension to Hong Kong for many years. DSEM undertook to look into the issue and provide a reply.Adm

18. The Deputy Chairman suggested the RLS Division to carry out research on the wages of workers of fast food chains, supermarkets and companies responsible for cleaning work contracted out by the Government. H(RL) undertook to review the availability of resources in the RLS Division.H(RL)

19. Dr LUI Ming-wah said that the estimated minimum wage for Hong Kong seemed to be higher than other places in Asia and enquired whether a comparison could be made on the minimum wages of different places having regard to their respective costs of living. H(RL) referred to Table 9 and advised that to facilitate such a comparison, the gross national product per capita converted by purchasing power parity (GNP PPP per capita) factor, which was generally used in economic studies, had been used as an indicator of the general living standards of the places studied. It could be noted that while US had the highest GNP PPP per capita, its minimum wage was only the third highest among the places studied. While France had the highest minimum wage, its GNP PPP per capita was only the fourth highest.

20. Miss CHAN Yuen-han requested the Administration to carefully examine the Report and draw up long-term solutions in the area of minimum wages. She suggested that the issue of minimum wages be discussed again at the Panel meeting in July 1999. Mr James TIEN opined that in examining the Report and the issue of minimum wages, the Administration should also examine the impact of minimum wages on enterprises, particularly small and medium enterprises, and the impact on the overall economy of Hong Kong. His view was shared by Dr LUI Ming-wah, who considered that minimum wages should also be examined together with the Comprehensive Social Security Assistance Scheme. Dr LUI added that the introduction of a minimum wage was a passive measure to protect workers. The Administration should consider creating more jobs.Adm


21. The Chairman commented that the Administration had been relying on the labour market to adjust itself in respect of the wages of workers. However, the unemployment rate had recently risen to 6.3% and was expected to rise further. As the number of minimum wage workers would only amount to 10% of the labour force, and the minimum wage only sought to protect the low income group, the Administration should seriously re-consider whether its non-intervention policy should still be continued.

22. Members agreed that the issue should be discussed again at the Panel meeting in July 1999.

IV. Progress of measures to create jobs and tackle unemployment
(LC Paper No. CB(2) 2072/98-99(03))

23. At the invitation of the Chairman, DSEM highlighted the progress of measures to create jobs and tackle unemployment. He informed members that the paper had incorporated a separate column on the latest progress.

24. In response to Mr CHAN Wing-chan, DSEM advised that all job vacancies created from major repair and maintenance works for aided schools and expedited minor Government maintenance works had been filled.

25. Mr HO Sai-ch- said that, to his knowledge, there had been a slight increase in the overall supply of jobs in the first quarter of 1999 after a decrease in the last two quarters of 1998. The increase in unemployment rate might be due to the increase in the number of people seeking jobs exceeding the number of jobs created. DSEM responded that while he did not have such information on hand, his impression was that there was a slight increase in the supply of jobs.

26. Mr Andrew CHENG was concerned that the unemployment rate would increase with more university and secondary school graduates joining the labour market in the summer. DSEM responded that the Administration was also very concerned about the issue. The Task Force on Employment (the Task Force) would discuss the issue at its meeting on the following day. At the request of the Chairman, he agreed to provide information on the measures agreed by the Task Force at the next meeting.Adm

Telephone referral service

27. On the number of job-seekers who had successfully sought employment through the telephone referral service, Assistant Commissioner for Labour (Employment Services) said that there was no information on the success rate of the telephone referral service. The overall employment rate was about 16% to 24%. The percentage varied with time and the highest rate achieved was 30%. He added that the telephone referral service was not the only channel through which job-seekers sought their jobs. Other channels such as visiting the Local Employment Service (LES) offices in person and seeking jobs through the Internet were also used at the same time. According to an informal survey conducted by the Labour Department (LD), the success rate was in the region of 25% to 33%, with the percentage being lower for jobs of higher ranks. Commissioner for Labour supplemented that the telephone referral service involved displaying the particulars of job vacancies at LES offices so that job-seekers could contact the employers direct for arranging job interviews.

Special nine-month Certificate of Skills Training (Service Industries) Course

28. Noting that there had been keen competition for the 1 000 vacancies in the special nine-month Certificate of Skills Training (Service Industries) Course, Mr CHAN Wing-chan enquired why only 916 students had completed the first term and 907 students had completed the second term. Executive Director of Employees Retraining Board (ED/ERB) advised that the number of students who had completed the first and second terms were less than 1 000 since some of the students had successfully sought employment and withdrawn from the Course. All vacancies arising from such a situation had been filled by other applicants. In response to the Chairman's question on whether new classes would be organized for the Course, ED/ERB said that the Course was organized on a trial basis. ERB would evaluate the results after the three terms of the Course had been completed before deciding whether new classes would be organized and whether modifications should be made to the course contents. The Chairman and Miss CHAN Yuen-han however considered that evaluation should commence once the first term had been completed. ED/ERB advised that students had to pass the examination for a term before taking the next term. As the terms finished at different times, it was necessary to wait until the three terms had been completed before an evaluation on the Course was carried out.

New vacancies created in government departments

29. Miss CHAN Yuen-han referred to paragraph 3 of the paper and enquired whether the 8 500 vacancies created in government departments were generated from the Civil Service Reform. Noting that the unemployment rate had continued to rise, she questioned whether the vacancies were temporary posts created through deletion of permanent posts. DSEM responded that to his knowledge, the vacancies were not temporary posts created through the deletion of permanent posts. The vacancies were not related to the Civil Service Reform. He added that the unemployment rate only reflected the overall economic climate. Miss CHAN Yuen-han opined that although the Administration was creating new jobs through various measures, it was generating unemployment through the abolition of the Auxiliary Police Force, the privatization of government departments such as the Housing Department, and the Civil Service Reform.

New vacancies created in the subvented and private sectors

30. Mr James TIEN referred to paragraph 3 of the paper and questioned whether 113 000 new jobs would be created in the subvented and private sectors in 1999-2000 under the current economic climate. DSEM advised that the estimation of new vacancies was based on information in respect of the major government initiatives and projects, including public housing projects and railway projects, provided by various government departments and the two railway corporations. As many of these projects were contracted out to private companies, some new jobs were created in the private sector.

Information on the number of jobs deleted

31. Mr LEE Cheuk-yan referred to item 1 of the Table and commented that while 24 000 new jobs had been created through advancing the commencement of public works projects, no information was provided on the number of jobs deleted. To his knowledge, there had been a reduction in the number of temporary staff employed in various government departments. Jobs were also deleted upon the completion of public works projects. He was concerned that some consultancy firms were reported to have shifted their operations to the Mainland and certain components of new public housing units were pre-casted in the Mainland before transported to Hong Kong for installation. In view of these, he questioned whether the 24 000 job vacancies generated from works/consultancy contracts would all be filled by local workers. He considered that job vacancies arising from operations that had been shifted to the Mainland should not be counted as jobs created. He added that if so many jobs had been created, the unemployment rate would not have risen to such a level. DESM advised that there were difficulties in gathering information on the number of jobs that had been deleted. Nevertheless, the Administration would look into the issue.		Adm

32. Mr HO Sai-chu said that most construction works could only be carried out in Hong Kong. With no importation of labour, the jobs would certainly be filled by local workers. He added that the Public Works Subcommittee (PWSC) had recently held more frequent meetings and approved more projects. He called for support of the proposals submitted to PWSC so that more jobs would be created in the construction industry. DSEM said that EMB had and would continue to work closely with the Works Bureau in the advancement of public works and creation of jobs. Miss CHAN Yuen-han said that the Hong Kong Federation of Trade Unions had been urging the Administration to include in its public works contracts the requirement to employ local labour. Unfortunately, nothing had been done in this respect.

Training in the skills of domestic helpers

33. Mr Andrew CHENG commented that there was a higher demand for domestic helpers and enquired how ERB would match the training of domestic helpers with the needs of the community. He also considered that besides running more domestic helpers training courses on Hong Kong Island, ERB should also organize more of such courses in the New Territories. ED/ERB advised that to match the needs of employers who only required part-time domestic helpers, ERB had combined part-time jobs within proximity into "job packages" for its graduates. The employment rate of graduates who had completed domestic helpers training courses was about 74%. On the issue of organizing more domestic helpers training courses in the New Territories, he advised that more training courses would be organized both on Hong Kong Island and in the New Territories. More training places were provided in centres on Hong Kong Island because there had been a higher demand for domestic helpers on Hong Kong Island.

34. In response to Miss CHAN Yuen-han's enquiry on whether ERB had plans to strengthen the training of domestic helpers in the area of elderly care, ED/ERB said that ERB was revising its courses to meet the needs of the community. The syllabus of domestic helpers training courses was being revised to include training in elderly care. It was expected that the revised courses would be fully launched in September or October 1999.

Illegal workers

35. Mr CHAN Wing-chan enquired about the number of illegal workers found in inspections carried out by LD. C for L undertook to provide the requested information after the meeting. He added that as LD was not empowered to arrest illegal workers, it had to refer such cases to the Immigration Department for actions.Adm

(Post-meeting note : The number of illegal workers found in inspections was subsequently provided by the Administration and issued vide LC Paper No. CB(2) 2194/98-99.)

V. Follow-up on right of workers to go on strike or take industrial actions
(LC Paper CB(2) 2072/98-99(04))

36. Secretary for Education and Manpower (SEM) briefed members on the Administration's views on whether sections 9, 31H, 31X and 32H of the Employment Ordinance (Cap. 57) (EO) contravened Article 27 of the Basic Law. He highlighted that -(a) Article 27 of the Basic Law provided that Hong Kong residents had the right and freedom to form and join trade unions and to strike;(b) sections 9, 31H, 31X and 32H of the EO were not in contravention of Article 27 of the Basic Law; and(c) with the coming into effect of the Basic Law, which expressly guaranteed the right to strike, the Administration took the view that a reasonable interpretation of section 9 would be the lawful exercise of the right to strike by an employee would not amount to misconduct or wilful disobedience of a lawful and reasonable order. The common law ground of strike as a breach of contract justifying summary dismissal would be obsolete as it was inconsistent with the right to strike as guaranteed under the Basic Law.

Issue of whether sections 31H, 31X and 32H of the Employment Ordinance should be repealed

37. Mr CHAN Wing-chan opined that paragraphs 5 and 8 of the paper were contradictory. He referred to paragraph 8 of the paper, which stated that the wordings of sections 31H, 31X and 32H of EO would be rendered meaningless if the interpretation of Article 27 of the Basic Law was adopted, and commented that the sections should be repealed, especially in view that the court would refer to the provisions of ordinances in the adjudication of cases. SEM responded that there was no contradiction between paragraphs 5 and 8 of the paper. With the coming into effect of the Basic Law, an employer could not use section 9 of EO to dismiss a worker who participated in a strike. While the Administration would not object in principle to repealing sections 31H, 31X and 32H at an appropriate time, there was no pressing need to repeal them immediately. Miss CHAN Yuen-han said that if the sections were not deleted, the court might sometimes need to seek an interpretation of the provisions, resulting in unnecessary court costs. Mr Andrew CHENG added that even if the sections were not in contravention of the Basic Law, they should be amended to give a clear meaning.

38. Mr HO Sai-chu however considered that the recent cases concerning the right of abode in Hong Kong under Article 24 of the Basic Law revealed that the court would have regard to the Basic Law when interpreting the provisions of an ordinance. He was therefore not worried even if the sections were not repealed.

Consistency of section 21 of the Employment Ordinance with the Basic Law

39. Mr LEE Cheuk-yan said that section 21B of EO, which stipulated that a member or an officer of a trade union had the right to take part in the activities of the trade union at an appropriate time, also contravened Article 27 of the Basic Law in respect of the right of workers to go on strike. SEM undertook to look into the issue and provide a reply.Adm

40. Mr LEE Cheuk-yan said that the Hong Kong Confederation of Trade Unions was concerned about the right of reinstatement, which was being examined by the Administration. SEM advised that the Administration was studying the right of reinstatement and would report the results in due course.

Definition of "strike"

41. In response to the Deputy Chairman, SEM said that under the Trade Unions Ordinance (Cap. 332), "strike" meant the cessation of work by a body of persons employed acting in combination, or a concerted refusal, or a refusal under a common understanding, of any number of persons employed, to continue to work for an employer in consequence of a dispute, done as a means of compelling their employer or the employer of any other person or body of persons, or any person or body of persons employed, to accept or not to accept terms or conditions of or affecting employment.

42. The Chairman advised that the issue would be discussed again at the next meeting. Besides setting out the Administration's view on whether the provisions would be repealed, the Administration should review the right of civil servants to go on strike under the Basic Law. The Deputy Chairman requested the Administration to provide the definition of "strike" in the paper.Adm

43. There being no other business, the meeting ended at 4:30 pm.

Legislative Council Secretariat
15 July 1999