*
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12.
13.
14.
as an alternative to the Green Paper proposal, which would then be dropped. If the public service are in the scheme then other employers could also be included on a compulsory basis.
It would be up to them whether they wished to increase salaries to pay for contributions to the scheme and abate their own occupational benefits accordingly. No doubt legislative cover could be provided for any necessary changes to occupational benefit schemes, for example where scheme rules had to be overridden.
If the proposal in para 11 were not thought to be a runner then an alternative would be to look again at the possibility of retaining the broad structure of a contributory scheme but putting the contributions on employers only. A broad brush approach could be to have a payroll tax of some kind or even (as was suggested when I was in Hong Kong by one of the employers associations) to pay for the scheme by a small increase in corporation tax. Alternatively, and as a much simpler form of contracting-out (providing admittedly rather rougher justice), employers could be required either to provide benefits as good as those in the Government scheme or to pay so much into the Government scheme, the amount to depend on the number of employees. No provision would be made for the automatic transfer of benefit rights when an employee moved job. He would either keep the benefits he had earned working for a contracted-out employer or retain the rights he had earned in the Government scheme.* Since he would not himself be paying contributions, there would be no need to provide an option for him to leave the Government scheme whenever he wished.
The
If a major obstacle to the contributory scheme is the view that the administrative complications are out of proportion to the benefits involved, there are two points that should be borne in mind. first is that there are always ways and means of simplifying a scheme, even though this may mean rougher justice. Paras 11-12 offer some proposals on this and if further work were done on it no doubt other possibilities would emerge. Hong Kong has an enviably slim administration in many ways and has a good track record in finding ways of keeping administrative costs down. Secondly, unless one assumes that there is to be no further change in social security in the foreseeable future, the savings from not having an expanded structure now might well increase the price and complexity of introducing other changes later. This is another aspect of the point already made on not unnecessarily circumscribing future policy options.
If, on the other hand, it is decided that a contributory scheme is not desirable there might be a different way of requiring employers to provide better sick pay cover. If statutory cover were to be extended - say to three or six months sick pay, either on a flat rate or earnings related basis- the pill could be sweetened for employers by the Government undertaking to reimburse them for a proportion of the cost. The bigger the proportion, the more acceptable the proposal would be to the employers. But equally the bigger the proportion paid for by the Government, the less employers would be inclined to police the scheme adequately. It would be a matter of judgement where the line should be drawn: but presumably a Government contribution of say three-quarters of the cost would help to smooth the passage of the proposal. Even if the Government contribution were recouped partly or wholly through other taxation, it would ensure that the risks of sick pay were evenly spread throughout all employers.
*These are the bare bones. In more detail, there would be no require- ment to transfer benefit rights from one private scheme to another. But after, say, 5 years service, an employee who moved might retain any death or retirement benefit in the scheme or receive a lump sum payment in lieu.
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