Business chambers warn of 'conflict' over MPF milestone

Business chambers have voiced disappointment after the Legislative Council passed the abolition of the offsetting mechanism of the Mandatory Provident Fund which takes effect in three years.

The much-anticipated move was supported by 72 out of 89 lawmakers in the bill's third reading yesterday. Five were against and 12 abstained.

The government has earmarked HK$33.2 billion for subsidies to employers.

Secretary for Labour and Welfare Law Chi-kwong hailed the passage of the bill as a "major milestone" that strengthens retirement welfare.

From 2025, employers will no longer be allowed to offset the severance and long-service payments to workers against MPF benefits derived from employers' contributions.

The Federation of Hong Kong Industries said it is "extremely disappointed" about the passage of the bill and slammed the government for prompting unnecessary conflict between employers and employees.

"The outlook of the pandemic and the global economy remains gloomy. The industrial and business sectors are still trying to get back on their feet, but the cancellation has increased the financial and psychological burden of small and medium-sized enterprises," the federation said.

"We would like to call on the government to keep a close eye on the long-term impact on the business environment and employers' affordability and make amendments to the bill when necessary."

Chinese General Chamber of Commerce chairman Yuen Mo said it understands the bill's passage and anticipates that the government will strike a balance between the economic development in the industrial and business sectors and employees' rights and benefits.

The legal sector's Ambrose Lam San-keung was the only lawmaker who changed his mind regarding the vote. He abstained yesterday after being against the bill in Wednesday's second reading.

Liberal Party chairman Peter Shiu Ka-fai said the business sector expected the bill to be passed.

"I hope the cancellation of the offsetting mechanism will not lead to problems that the sector fears the most, including the relationship between employers and employees turning sour, or causing an unstable employment market," Shiu said.

The Federation of Trade Unions welcomed the voting result and called on the government to implement it as soon as possible. Chairman Stanley Ng Chau-pei said: "The cancellation has to wait till 2025 when the eMPF platform is launched. This arrangement is extremely ridiculous. I think the government should set an exact date for the law to take effect."

Law admitted that no one can predict the government's financial position when the plan is implemented in 2025.

The current administration is trying to do foundation work for the coming cancellation, he added.

Chief Executive Carrie Lam Cheng Yuet-ngor also welcomed the passage of the bill and thanked employers and employees for their effort to reach a consensus.

She said a good relationship between employers and employees will create an "excellent" business environment and called on businesses to cooperate with the government to improve worker rights and benefits.

MPF Schemes Authority chair Ayesha Macpherson Lau said the passage of the bill "carries a significant meaning in further refining the MPF System, strengthening the retirement reserves of the working population and enhancing the effectiveness of the retirement protection outcome."

The cancellation will be implemented in phases starting from 2025, with the government subsidizing employers until 2050. Employers' contribution to workers' severance and long-service payments will gradually rise, with the cap at HK$3,000 in the first three years until 2028 and increased to HK$50,000 until 2035.

From 2035, employers will then have to shell out 80 percent of the payments without a cap. From 2050 they pay in full.

michael.shum@singtaonewscorp.com

Editorial: Move on now MPF offset scrapped