LegCo Panel on Manpower
(for meeting on 23 December 1998)
Employees Retraining Board: The way forward

Introduction

This paper sets out the background and the latest developments of the Employees Retraining Board (ERB), as well as its future plans.

Objective of the Employees Retraining Scheme

2. The ERB was established in October 1992 under the Employees Retraining Ordinance to administer the Employees Retraining Scheme. It is a statutory body comprising representatives from employers, employees, the Government, training institutions and manpower planning professionals. The original objective of the Employees Retraining Scheme was to retrain workers who were displaced as a result of economic restructuring so that they could acquire new skills to adjust to changes in the labour market.

3. Arising from the results of a review of the Scheme which was completed in June 1997, ERB is now primarily focused on providing retraining for the unemployed who are aged 30 or above with no more than lower secondary education, so that they can secure employment and hold down their jobs in the market. Apart from these target retrainees, ERB is also providing training for home makers, people over the age of 50, people with disabilities, industrial accident victims and the chronically-ill who wish to rejoin the employment market, as well as serving employees who meet the relevant eligibility criteria and wish to update their basic general skills. The ambit of ERB was extended to include new arrivals with effect from January 1997.

Mode of Training

4. The ERB is a funding agency, instead of a direct provider of training. At present, over 140 types of retraining courses are offered through a network of 56 training bodies (including mainly institutions experienced in vocational training or adult education) at 123 training centres throughout the territory. The retraining courses, which comprise both full-time and part-time courses, fall broadly into six categories - (1) job search skills, (2) job specific skills, (3) general skills, (4) courses for the elderly, (5) courses for people with a disability and (6) tailor-made courses for vacancies of individual employers. The major areas are language and computer skills, basic accounting, building attendants and domestic helpers training. The duration of full-time courses normally ranges from one week to six weeks, the longest being nine months, while that of half-day and evening courses ranges from three to six months.

5. All full-time courses are free of charge since they cater mainly for the unemployed, and retrainees of full-time training courses lasting for more than a week are eligible to receive a retraining allowance at the rate of $4,000 per month. Retrainees of part-time or evening courses which cater mainly for employed persons wishing to consolidate or upgrade their skills are basically not eligible to receive any allowances. Moreover, employed persons are required to pay a fee amounting to some 20% of the retraining costs of the relevant courses. However, both the unemployed and the low-income earners (with a monthly wage which is less than two-thirds of the latest overall median wage, i.e. $6,333 at present) will be exempted from paying fees for such courses.

6. Since its inception, the ERB has provided over 260,000 retraining places for over 140,000 persons. Apart from providing training, training bodies also offer placement assistance to graduate retrainees through their employers' network. The average placement rate of graduates of full-time retraining courses is 70%. For the first eleven months of 1998, a total of 22,497 persons completed full-time training and 33,313 persons completed part-time training courses. The average job placement rate for those full-time retrainees from January to July this year is 69%. A table showing the breakdown of training places by ERB's different programmes and their placement results is at Annex A.

Financing of the Scheme

7. The recurrent funding of ERB is financed by a levy of $400 per worker per month from employers employing imported workers. The total amount of levy received from 1992-93 to 1996-97 is $431 million, against the total expenditure of $833 million during the period. ERB also received from the Government a capital injection of $300 million when the ERB was set up in late 1992, and two further capital grants of $300 million and $500 million in June 1996 and March 1997 respectively. At its meeting on 4 December 1998, the Finance Committee of the Legislative Council approved a further capital grant of $500 million to ERB with effect from 1 April 1999. ERB's outstanding cash balance amounts to about $482 million as at 30 November 1998.

Review of the Employees Retraining Scheme

8. In April 1996, the Government conducted a review on the Employees Retraining Scheme. The results of the review were announced on 24 June 1997. The main thrust of the recommendations was that the Employees Retraining Scheme should be more tightly focused and should concentrate primarily on providing retraining for all unemployed persons who are aged 30 and above and with no more than lower secondary education. Other key measures to improve the effectiveness of the Scheme include restructuring the retraining programme into packaged training courses which aim at helping retrainees to secure and hold down jobs, transferring all the Skills Upgrading Courses to the Vocational Training Council (VTC), and introducing a placement-tied and performance-based payment system for the training bodies. With the exception of a placement-tied payment system for training bodies which has yet to be fully implemented pending the adoption of the recommendations of two consultancy studies on financial and accounting system and course administration, all the recommendations have already been put into effect.

Measures to ease unemployment since early 1998

9. Ever since early 1998, ERB has been implementing a series of measures to ease unemployment. The latest progress of these measures is as follows -

1. It relaxed the age and qualifications requirements of eligible retrainees (while retaining priority for those aged 30 or above and with less than secondary 3 education) as well as the maximum number of full-time retraining courses which each retrainee can enroll (from one course every two years to two within one year) as from 1 April 1998.

   From April to October 1998, ERB recorded some 50% increase in the number of applicants for retraining courses when compared with the same period last year (from 47,756 to 71,758). They include 7,298 previously unqualified for retraining--5,325 applicants who were aged below 30 plus 1,973 applicants who benefited from the "one-year-two-courses" rule.

2. It organised jointly with VTC a special nine-month full-time Certificate of Skills Training (Service Industries) Course for 1,000 unemployed persons. Of these 1,000 training places, 400 are provided by ERB's training bodies. The course commenced on 14 September 1998.

3. It focused on developing tailor-made retraining courses for individual employers since early 1998. From January to November 1998, some 1,283 job vacancies had been identified; 61 tailor-made retraining classes had been organised; and 1,156 retrainees had completed training. 444 out of 580 retrainees who completed training from January to July 1998 have been placed in the relevant vacancies, representing a job placement rate of 77%. A table showing the progress of these tailor-made courses is at Annex B.

4. It focused on developing tailor-made on-the-job retraining courses since early 1998. These programmes comprise four to six weeks' classroom training at a training body which the trainee receives a maximum retraining allowance of $4,000 per month, an on-the-job training period at the workplace of the employer where the trainee receives on-the-job training allowance of $2,000 per month for up to three months, and 12 months' post-employment follow-up services provided by the relevant training body. So far, ERB has identified 2,000 job vacancies in the next two years for this purpose.

5. It set up a "One-stop" service unit comprising 8 staff which includes two centrally managed telephone hotlines at the main office of ERB since late August 1998. Up to 30 November 1998, a total of 4,876 and 18,370 telephone enquiries respectively from employers and employees have been handled and 3,105 vacancies have been registered.

6. It is enhancing the retraining-cum-job matching programmes for domestic helpers. From late August to 30 November 1998, ERB's one-stop service unit received 3,630 enquiries, 1,228 vacancies and placed 344 retrainees as domestic helpers. From April to November 1998, ERB organised a total of 141 training classes for 2,791 persons. From April to July 1998, 609 out of 843 retrainees had been placed in domestic helper jobs, representing an average placement rate of 72%. ERB has also launched, in conjunction with 13 training bodies, a new series of marketing and training initiatives for domestic helpers, to tap the huge potential for job creation in this market. Its one-stop unit is now working closely with these training bodies with a view to matching the job vacancies at different districts with the retrainees more effectively.

7. To cope with the increasing demand for retraining, it decided to expand its total training capacity by 6,000 to 79,000 and increase its total training expenditure by $95 million to $396 million in 1998/99. 1,000 of these training places refer to those for the special nine-month full-time Certificate of Skills Training (Service Industries) Course which is being jointly organised with the VTC as mentioned above. The remaining 5,000 training places comprise 1,750 places for full-time training and 3,250 places for part-time training.

8. It has extended the opening hours at its main office to 7 p.m. on weekdays since 2 November 1998.

Future plans

10. Given the prevailing economic environment and labour market situation, we expect to see a continued and strong demand for retraining in 1999-2000, especially for those who have not yet completed secondary education. The demand for part-time training courses will also continue to increase, as the employed would need to acquire more basic skills to sustain their employability in the market. Whilst continuing to provide market-driven and employment-oriented training courses, ERB plans to continue implementing the above series of new measures to ease unemployment. It will also review the effectiveness of the nine-month full-time Certificate of Skills Training (Service Industries) Course for 1,000 unemployed persons to see whether more such courses should be devised.

11. ERB is developing a new strategic plan to improve the quality and cost-effectiveness of retraining from 1999-2000 onwards. Its long-term objectives are to establish a continuous and preventive training system so as to minimize unemployment in Hong Kong. The major parts of this strategic plan are as follows :

1. Enhance the quantity and quality of courses and services

   It will develop a more elaborate evaluation system and performance indicators for training bodies; standardize similar courses, upgrade their quality and seek employers' recognition; and repackage training courses in modular forms etc.

2. Upkeep market intelligence

   It will conduct more systematic and regular researches into the manpower needs of the labour market for dissemination to the training bodies to facilitate the evaluation and improvement of the various training courses and related services.

3. Strengthen partnership with employers and stakeholders

   It will enhance communication and develop strategic partnership with employer/trade associations, employee groups, training bodies and concerned Government departments through setting up steering/advisory committees on categories of core courses - soft skills, information technology, language, property management, domestic helpers etc.

4. Enhance cost effectiveness

   It will strengthen the system of financial and auditing control over training bodies, and make a greater and more effective use of computer facilities in its provision of courses and services.

5. Foster a positive corporate image

   It will coordinate the public relations and marketing measures on ERB's services in a more systematic and cost-effective manner, and liaise more closely with mass media and interested parties.

12. As announced in the 1998 Policy Address, the Government plans to develop a qualifications framework for programmes provided by the VTC and ERB, in order to provide a well-structured education and training ladder for both the employed and unemployed. We aim to draw up initial proposals by the end of 1999. ERB has to play a major part in this exercise. To this end, it is setting in train the preparatory work by liaising with both major employers' associations and training bodies on how best to consolidate the curriculum of its various training courses, and seek proper recognition of the relevant qualifications.

13. The implementation of these new plans and measures and the provision of the $500 million capital grant to ERB as from 1999-2000 necessitate a holistic review of the administrative and financial management. To this end, ERB recently undertook two consultancy studies on ways and means of streamlining and strengthening its overall financial management and course administration system. Specifically, these two studies seek to address how best to revamp ERB's funding arrangement with its training bodies and course administration mechanism with a view to strengthening the overall quality control system and ensuring the provision of value-for-money training in the longer term. ERB aims to implement the results of these two studies as soon as possible.

Staffing implications

14. The office of ERB, which comprises a total of 51 staff, is headed by an Executive Director. He is underpinned by one Senior Deputy Executive Director (SDED) and one Deputy Executive Director (DED), both of whom are officers on secondment from the Civil Service. The SDED post is currently filled by a Senior Principal Executive Officer (SPEO) on secondment from the Government while the DED is occupied by a Senior Labour Officer from the Labour Department. While the DED post was a permanent post created in 1992 together with the Executive Director post when the ERB was established, the SDED was a temporary post created on 1 September 1997, mainly to strengthen the directorate support of ERB for the purpose of implementing all the recommendations arising from the review of the Employees Retraining Scheme which was completed in June 1997. This supernumerary post will lapse on 1 February 1999.

15. We intend to seek the endorsement of the Establishment Sub-committee of the Finance Committee of the Legislative Council at its next meeting on 13 January 1999 on the proposal to retain the supernumerary post of SPEO for another year up to 29 February 2000, so as to enable the continued secondment of the incumbent officer to ERB for the post of SDED. We see the need to extend the secondment for the following reasons:

1. The increase in the demand for retraining as a result of rising unemployment and the implementation of all the new measures set out in paragraphs 9 to 13 above have led to a substantial increase in both the workload and responsibility of the top management staff of ERB to an extent beyond what was envisaged a year ago. It is necessary to extend the secondment of the SPEO to fill the post of the SDED for another year up to 29 February 2000, so as to provide ERB with the requisite expertise in internal administration and financial management to see through the implementation of the various new measures during this critical period.

2. As the existing Executive Director has taken up the post only since mid-October 1998, the continued secondment of the incumbent SPEO will provide him with the much-needed continuity at ERB's top management, and the necessary administrative support during his initial year of appointment. This will also enable him to settle in his job smoothly, and concentrate on formulating, substantiating and implementing the new strategic plan for the future direction of ERB over the next few years.

The main duties of the SDED of ERB and the organisation chart of the office of ERB are at Annexes C and D.

Education and Manpower Bureau
December 1998

Annex A

Yearly progress of retraining programmes by the course categories
(1992/93 up to November 1998)

Course Types	Normal duration (Week)	Number of retrainees having completed retraining							Placement rate Average from course period(Jan 98 to Jul 98)
		1992/93	1993/94	1994/95	1995/96	1996/97	1997/98	1998/99 (as at 30.11.98)
Job Search Skills	1 week	---	6958	12813	7197	5515	3852	2342	67%
Job Search Skills for New Arrivals	1 week	---	---	---	---	---	1146	448	71%
Tailor-made Courses	1 to 6	---	---	---	412	831	794	1056	76%
Job-Specific Skills	2 to 8	309	1817	4757	9614	12880	15060	15310	69%
Elderly Programmes	2 to 14 (full/part-time)	---	83	1255	1226	1275	1117	1459	64%
Disabled Programmes	4 to 40 (full/part-time)	---	---	648	618	606	699	379	50%
General Skills (Computer and languages)	4 to 48 (part-time)	77	1926	20584	38694	33304	32486	24275	Not applicable
Skills Upgrading	4 to 50 (part-time)	---	126	418	1025	927	473	0	Not applicable
	TOTAL	386	10910	40475	58786	55370	55627	45269	69%

Annex B

Progress on the Tailor-made Programmes
(January 98 to November 98)

Course	No. of retrainees completed training	Placement rate*
Security guard/Property management/Car park attendant	403	88%
Cleansing foreman/Cabin attendant/Car cleansing and beautify	338	73%
Customer assistant/Cabin attendant/ Salesman	95	88%
Assistant cook	18	78%
Gardener	42	69%**
Tunnel boring machine operatives trainees	27	89%**
Stand builder	33	94%**
Telecommunications industry (e.g. Customer cable installation/maintenance technician, cable jointing & testing technician)	94	88%**
Outerwear sewing worker	36	77%**
Personal care attendant	53	Not yet available
Courier	17	100%**
Total	1156	77%

* Refers to the placement rates of the full-time courses completed between January and July 98

** Based on the preliminary figures reported by training bodies

Annex C

Job Description of the Senior Deputy Executive Director of Office of Employees Retraining Board
(Senior Principal Executive Officer)

Main Duties and Responsibilities

1. To assist the Executive Director in overseeing the smooth operation of the ERB, including internal administration, financial control and audit, resource management and Management Information System;

2. To assist the Executive Director in overseeing the financial management of the Employees Retraining Fund;

3. To assist the Executive Director in administering the Employees Retraining Ordinance and recommending revision or amendment to it as and when required;

4. To supervise two consultant studies relating to financial control and course administration respectively, and implement the recommendations arising therefrom including revisions to the funding arrangements for training bodies; and

5. To supervise the work of Deputy Executive Director, in particular about the processing and vetting of course / budget proposals, placement service as well as research and development work.

Annex D