It has been noted earlier that Hong Kong does not depend upon formalised collective bargaining as a pivotal institution for regulating pay and other labour-management relationship issues. The immaturity of collective bargaining as a form of quasi-industrial government has been commonly attributed to the weakness and internal division of the trade union movement, and the proliferation of unions and their low commitment to job-related objectives of economic betterment. Above all, the assumption is widespread -in part rationalistic and in part ideological that the "natural" forces of market supply and demand are a better guarantee for the protection of wages as well as a sufficient regulator of the efficient allocation of manpower resources. Such psychology has implied little incentive for either side to bargain collectively, or for the Government to encourage its practice.
Of course, a low profile of collective bargaining at the economy-wide level is a generalised observation that can conceal important inter-sectoral diversities in actual practice. Contrasting situations exist, for instance, in the traditional trades, modern manufacturing industries, public utilities and the service industries.
In spite of its rudimentary character, collective bargaining has been practised on a less-sporadic scale in
the traditional trades than in the modern manufacturing sector. General wage agreements are renewed periodically (normally at annual intervals) between a number of craft unions and employers' associations or individual firms in the corresponding trades. The sources of these collective bargaining norms can be described as traditional, attributable in large measure to custom and practice
inherited from pre-industrial Chinese craft and trade
guilds.
Nevertheless, with the dissipation of the guild
structure, this traditional system of industry-wide determination of wage norms has lost much of its original efficacy. These trade agreements have been reduced to little more than ritualistic instruments, pertaining to such fundamental items as basic m1n1mum wage rates and overtime payments. The actual rates paid at the individual places of work inside the industry tend to vary widely from these nominal standards determined under the industry-wide agreements, and such agreements are not binding on those employees and employers who are not members of the unions or employers' organisations concerned. Even among those who are, the degree of effectiveness in enforcing the terms of the agreement is dubious since observance in most cases appears voluntary rather than obligatory, inasmuch as they are backed by nothing more than moral sanctions. A variant practice, in place of bilateral or multilateral negotiation between unions and employers in these trades, is a process of implicit bargaining initiated under the unilateral representation by unions on annual wage increases. Under such circumstances, it is not uncommon for the firms to respond to the union's declaration of wage standards by announcing an alternative yet modified version of the proposed pay scale, with or without prior consultation with the initiating union. 1
In contrast to the traditional industries, the institutional type of fotmal collective bargaining is weak or almost non-existent in most manufacturing industries. The low degree of collective bargaining is obviously associated with the fragile union base in this sector: in 1979, a mere 9.76 per cent of the industrial labour force was organised.2 This phenomenon of union docility, unlikely to have changed significantly on account of the declining trend of union density in the first half of the 1980s, is especially conspicuous in the modern and expanding industries notably the female-dominated garment-making and electronics industries where only sparse
pockets of workers belong to unions. It is therefore not surprising to find no union-negotiated collective agreements in either of these two industries, whether plant or industry-wide. However, there are a few manufacturing industries with a relatively well-established union tradition like cotton spinning and printing. In printing, the open-ended agreement between the left-wing Federation of Hong Kong Printing Trade Workers' Unions and the Printers' Association purports to regulate holidays and workers' compensation to cover work injuries. On the other hand, in cotton textiles, the right-wing Cotton Industry Workers' General Union succeeded in winning recognition by major members of the employers' Cotton Spinners' Association and concluding with each of them a series of plant-specific collective agreements on a long-service bonus scheme over the period between 1967 and 1971.
By contrast, a mode of quasi-collective bargaining discernible at the level of the individual company in the modern industrial sector is the dispute-specific form of ad hoc group bargaining carried out at the place of work. The bargaining process is typically oriented to the issue(s) in dispute, which are normally pay (in particular, the piece-rates to be paid for new items or products) or termination (such as severance pay and other compensation in the event of redundancy or mass dismissal). The ad hoc nature of the dispute and of the emergent bargaining process gives rise to spontaneous and temporary combinations, which are dissolved after resolution of the dispute. In Hong Kong, this pattern of de facto "collective" bargaining, which may also yield a collective agreement for the parties to the dispute, is more common than the union type of institutional collective bargaining, although a union can be (but is not invariably) involved in either an advisory or supportive capacity to the employees.
Collective bargaining has not assumed any central importance in the determination of pay and other employment conditions for commercial and service workers in private enterprises. This tertiary sector, comprising mostly white-collar employees and a significant core of women workers, has been traditionally weakly organised; neither has the formal union-based mode of collective bargaining nor the spontaneous type of ad hoc collective labour response to specific dispute situations been common among these white-collar employees. Nevertheless, the notable exception to this tame pattern of organised bargaining activities is the restaurant trade, whose members form one of the better-organised occupations in Hong Kong. Its two leading unions, the right-wing Hong Kong and Kowloon Restaurant and Cafe Workers' General Union and the left-wing Union of Eating Establishments Employees, are both known for their active involvement in ad hoc bargaining over grievances and redundancies that concern members of the trade. In addition, the collective agreement concluded by the former union with a number of employers has served as an important benchmark for defining the provision and arrangement of annual leave and other holidays among restaurant workers at the individual workplace.
Despite the absence of formal collective agreements, the manner whereby pay and other conditions of employment are reviewed at regular (normally annual) intervals in most public utilities is suggestive again of another form of quasi-collective bargaining. This normally involves a process of labour-management dialogue prior to the formulation of the annual pay scales. Yet the procedure falls short of orthodox collective bargaining inasmuch as management retains the ultimate prerogative of determining and announcing on its own the amount of wage increases to be adopted. Under one approach, the management may inform the unions mostly the minority right-wing unions in preference to their rival left-wing counterparts -of its proposed wage adjustments for the next year, and canvass and reconcile, if warranted, the comments and counter-proposals from the union before announcing its final decisions on wage increases to the employees. An alternative method is to make use of joint consultation, where such procedures of employee representation exist at the workplace, as a de facto machinery for joint negotiation. It is common for representative consultation of this nature to operate outside and independent of the framework of union organisation.
The closest approximation to modern collective bargaining in the Western sense is probably found in the public service and a major public utility enterprise specialising in telecommunications, inasmuch as their agreements go beyond substantive matters to deal with procedural issues such as recognition and general pay adjustment rules.
The latter case, the Cable and Wireless Ltd., represents a model of relatively mature company-level collective bargaining. The majority of its employees, mostly professionals, technicians, office staff and other white-collar workers, are organised by an enterprise union, the Cable and Wireless Limited (Hong Kong) Staff Association. After experiencing a period of intense and bitter union-management strife which culminated in an industrial dispute in 1973, management extended voluntary recognition to the union as the legitimate bargaining agent on behalf of the local staff. A collective agreement was concluded in 1976 between the union and the company, which was generally considered as a sophisticated and prototype instrument by Hong Kong standards. Besides covering substantive issues such as wages, bonuses, holidays and promotion, it provides for important procedural rules such as those related to grievances, and to strike and lock-out situations. The agreement, in addition, defines its duration and manner of renewal as well as the application of the "check-off" system for collecting membership dues.
In parallel, collective bargaining is practised with considerable rigour within the civil service, under rather elaborate staff consultative machinery established as a result of a 1968 agreement between the Government and the three main general unions in the civil service, namely, the Hong Kong Chinese Civil Servants' Association (HKCCSA), the Senior Non-Expatriate Officers' Association (SNEOA) and the Association of Expatriate Civil Servants (AECS). This process of central staff consultation, which is complemented by joint consultation at the departmental level between the department's management and the staff repr.esentatives (with or without the involvement of the grade-specific unions cocerned), takes place within the framework of the Senior Civil Service Council. The Council is composed of a maximum of six members from the official side and ten members from the staff side nominated from and by the three general civil service unions which are signatories to the 1968 agreement.
However, from the mid-1970s onwards, the proliferation :>f department-specific occupational grades, as a result of the rapid expansion of the civil service, has nurtured an ~psurge of comparability consciousness among these different occupational groups. Each started to pursue its sectional interests by demanding improvements in pay and ::areer structure vis-a-vis the others. These challenges, nanifesting themselves in a chain of vociferous claims and iemands, often backed by the threat of industrial action such as go-slows, have placed under heavy strain the traditional system whereby all decisions regarding pay bargaining have to be dealt with centrally by the Civil Service Branch, the Finance Branch and the Senior Civil Service Council.
Therefore, in order to find a way out of the impasse caused by the prolific outbreaks of civil service disputes and to restore an overall order of internal relativities to the civil service pay structure (which had been disturbed by previous ad hoc dispute-specific concessions), a Standing Commission on Civil Service Salaries and Conditions of Service was appointed by the Government in January 1979. Besides reviewing the principles, methods and procedure for determining civil service pay and, specifically, examining the various sectional claims and their ramifications for the pay structure, the Commission was also empowered to study the adequacy of the existing machinery, as founded upon the 1968 agreement and the resultant Senior Civil Service Council, for institutionalising service-wide communication, consultation and bargaining. Observing the limitations of the Senior Civil Service Council in representing the interests of industrial employees at the grass-roots level, the Commission recommended the creation of a lower tier to the existing Council so as to cater for the consultative and bargaining needs of these junior
public sector employees. The recommendation was
subsequently adopted by the Government, leading to the
inception of the Junior Civil Service Council in 1982.
II.l In place of collective
bargaining?
It has become almost universally acknowledged today that there are two principal aspects to the institutional significance of collective bargaining. The first and obvious role is the economic importance of collective bargaining on the labour market, as a means for employees and employers to determine the common price of the sale and purchase of labour. The other -perhaps more subtle but with far-reaching implications in the context of industrial government and democracy -is its jurisdictional nature as a device for the joint labour-management regulation of their relationship, employment standards and other issues of mutual concern. The essence here, according to Flanders, is to conceive collective bargaining as a political process, involving rule-making as defined by the employer-employee-union power relationship, and which in turn governs their status, behaviour and activities.3
Turning to the Hong Kong situation, the economic rationale for collective bargaining in the territory is often explained away by .reference to the imperative nature of its free market mechanism, hitherto considered to be relatively untempered by institutional constraints and intervention. So long as the "invisible hand" exists to regulate the supply and demand of labour, it is claimed that the force of free competition, as under the reign of the market, will naturally compel employers to pay the going rate. This implies, even without the aid of any organised or external leverage, protection of the worker ipso facto against wage exploitation. Ostensibly, a sustained level of high employment and labour demand in the economy over the last three decades has helped nurture this belief. Apparently there prevails a popular preference, not only among employers but also among workers and union leaders ~like, for negotiating individually rather than doing so concertedly in the structured forum of collective bargaining.
The legislative significance of collective bargaining as a rule-making process in industrial government has not been conspicuous in Hong Kong. Traditional employers' or managerial prerogative has remained largely intact,
inasmuch as the trade union mqvement is ill-disposed to secure employers' recognition as a full bargaining partner and most collective agreements, among those few that exist, are confined to prescribing little more than bare minimum substantive terms. Given such a vacuum, the principal lever to regulate employment standards and relations has come over the years from the Government. This is evident from the relatively extensive portfolio of labour legislation that has evolved during the last two decades, as pointed out in the previous chapter. In the language of Beatrice and Sidney Webb, workers in Hong Kong have therefore relied more upon the method of "legal enactment" than that of "collective bargaining" to achieve the establishment of a normative system of "common rule" in the
work situation. Nevertheless, the ultimate advantage is questionable for government intervention is likely to perpetuate and accentuate workers' dependency upon external and official sources of remedy and protection. Such a popular yet dependent psychology is 1iable to keep remote the prospect of an effectively organised labour movement. To that extent, collective bargaining or other "voluntaristic" forms of industrial government are unlikely to "come of age".
III. INDUSTRIAL CONFLICT
III.l Current pattern of industrial conflict
Trade disputes or major industrial conflicts in Hong Kong are predominantly concerned with substantive disagreements over wage rates, dismissals, redundancy, employer insolvency, and so on. Trade union involvement, especially by left-wing unions, can be found in a significant proportion of these disputes. Many of the actions in the recent period, however, seem to have originated in a spontaneous manner from the shop-floor. In a number of cases, the union has intervened only after the initial complaint has been registered. These disputes also tend to be transitory as organised conflicts, so that the ad hoc group that typically emerges to deal with the problem tends to disperse after the dispute and cannot sustain itself as a cohesive combination. Nevertheless, where union involvement is present, it is not uncommon for the
unions to use the conflict situation to recruit those
workers in dispute into their organisation.
One consequence of the devolution of industrial
conflict to the shop-floor has been the general increase in the number of work stoppages since the civil disturbance of 1967, as indicated in table IV.l. However, these outbursts of workers' militancy were typically of short duration, since they mostly lacked strategic planning and union sponsorship. As a consequence, the years since 1967 have also witnessed a sharp decline in the total working days lost through industrial disputes.
As an international comparison, Hong Kong has a low incidence of work stoppages and working days lost, in comparison with countries such as Belgium, Denmark, France, Ireland, Italy, the Netherlands and the United Kingdom. (see table IV.2).
With the beginning of the 1980s, the private industrial sector appeared to have given way to the civil service and the state-subsidised social service sector as the local arena of industrial action and conflict. Generally speaking, public sector employees are more prone to militancy in pursuit of their sectional interests. A number of landmark cases help to illustrate the nature of these industrial upheavals in the public service sector:
Table IV.1 Work stoppages in Hong Kong (1950/51-84)
Year No. of lock-outs Working daysand strikes lost
1950-51 13 4 252 1951-52 12 53 436 1952-53 1 193 1953-54 3 148 680 1954-55 5 13 853 1955-56 11 32 531 1956-5 7 12 78 852 1957-58 3 13 378 1958-59 6 2 205 1959-60 12 29 512 1960-61 9 29 010 1961 10 38 558 1962 8 11 831 1963 19 87 199 1964 15 46 581 1965 8 62 249 1966 12 24 355 1967 13 22 525 1968 24 8 432 1969 27 40 726 1970 47 47 243 1971 42 25 600 1972 46 41 834 1973 54 56 691 1974 19 10 708 1975 17 17 600 1976 15 4 751 1977 38 10 814 1978 51 30 927 1979 46 39 743 1980 37 21 069 1981 49 15 319 1982 34 17 960 1983 11 2 530 1984 11 3 121
Source: Commissioner for Labour, De2artmenta1 annual re2orts; Census and Statistics Department, Monthll digest of statistics.
Table IV.2 Various countries and areas: Workingdays lost through industrial disEutesEer 12000 EeoEle emEloyed2 1968-77
Country or area 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 -
Belgium 129 56 482 409 116 281 183 195 290 215
53 107 116
Denmark 19 31 56 11 11 2 007 96 France n.a. 144 110 270 228 232 197 228 293 214 Germany, Federal 1 12 4 119 3 26 49 3 26 1 Republic of
Hong Kong 7 32 37 20 31 40 7 12 3 6.37
Ireland 574 1 303 1 405 376 285 280 734 403 1 069 605
1 245 1 472 1 200 1 669 1 542 1 000
Italy 757 3 051 1 445 950Netherlands 4 6 69 25 35 152 2 0 4 61 United Kingdom 207 303 489 613 1 081 318 647 265 146 447
n.a. =not available.
Source: For Hong Kong: Census and Statistics Department, Hong Kong monthly digest ofEurostat, EmEloyment and
statistics, February 1981. For other countries and areas:unemployment 1971-77.
(i)
a dispute in 1976 over comparability and pay structure involving a go-slow by government demarcators and surveyihg assistants, "supported" subsequently by a legal decision which limited the administration's power to retaliate by pay deductions;
(ii)
the 1977 unrest in the police force, in protest against anti-bribery prosecutions of police officers initiated by the newly created Independent Commission Against Corruption. The demonstration of strength secured concessions from the Government to curb the "purge" movement and to allow the formation of a rank-and-file police association (which becomes, de facto, a quasi union);
(iii) the conduct of a one-man independent inquiry in 1977 by a law professor from the University of Hong Kong into the pay dispute between the Government and a group of technician grades associated with public surveying work in the civil service;
(iv)
a 1978 conflict between the management and staff of the Precious Blood School, involving protracted "sit-in" actions by teachers and students, led to the appointment of a Commission of Inquiry under Dr. Rayson Huang, the Vice-Chancellor of the University of Hong Kong;
(v)
since 1978, the outbreak in close succession of a multitude of sectional disputes involving paydemands by various public service occupational groups like social welfare officers, typists and stenographers, nurses, dispensers, air traffic controllers, tax assessors, urban service butchers and health inspectors, housing estate caretakers, post-office workers, etc.;
(vi)
in 1984, two trade disputes between the Mass Transit Railway Corporation (one of the few public enterprises in Hong Kong) and its drivers' union, principally because of the zeal of the latter to secure recognition and of the former to refuse and resist it.
A review of the local history of industrial conflict and trade unionism has led to the conclusion, as advanced in a recent critique of local labour relations, that those economic and institutional factors identified as strategic in determining union growth and workers' militancy in Western economies also apply readily to Hong Kong.4 These factors refer, in essence, to the structure of employment, the state of the labour market, and the relationship between prices and wages. Nevertheless, the overriding influence that underscores the changing profile of industrial conflict and the labour movement in this territory is the political milieu, especially with regard to China. For instance, the acquiescence of trade unions and their vanishing militancy are largely explicable in the context of the pragmatic modernisation policy presently pursued by the Chinese Government in Beijing.
However, there have been recent symptoms of increasing militancy among the public service unions, which apparently stem from developments other than politics inside and external to Hong Kong. The industrial unrest of the public employees may instead be considered characteristic of a large-scale, stable organisation like the government bureaucracy. This type of employer offers a high degree of employment security but 1imited promotion prospects, and the use of collective industrial action may prove highly instrumental for securing economic advancement, compared to individual striving on the career ladder. Another important reason is the crystallisation of occupational interest groups inside the civil service as the Government expands its scope of services and recruits an increasingly diversified spectrum of specialised personnel -so that mutual comparison of pay and conditions are prone to stimulate the demands of sectional interests. Thirdly, white-collar militancy occurring in the public service has also been widely interpreted as the defensive reactions of these groups to their perceived declining position. In terms of both economic opportunities and actual rewards, they may consider themselves to be less well-off now, vis-a-vis their manual and non-manual counterparts in the private sector, where numerous well-paying and financially secure job opportunities for secondary school and university graduates were available.5
III.2 Law regulating industrial conflict
III.2.1 Official classification
In Hong Kong, the official definition differentiates between two principal categories of labour-managementdisputes: claims and trade disputes. Claims are actionable in the Labour Tribunal and, as such, are concerned with differences over the interpretation or failures of application of an existing labour contract or of the Employment Ordinance. In essence, claims thus defined by the Labour Tribunal Ordinance, 1972, are conceivable as disputes over rights which involve the interpretation of already established norms. By contrast, trade disputes are defined broadly to embrace discord "connected with the employment or non-employ~nt or the terms of employment, or with the conditions of or affectingemployment of any person". Such a definition, as providedby both the Labour Relations Ordinance and the Trade Unions Ordinance, is consistent with the notions both of disputesof rights and disputes of interest. The latter types of disputes are those which have as their object the establishment or the alteration of collective norms, as they may affect future relationships among, and interests of, the parties.
In parallel, the legal definition of a "strike" can be found in the Trade Unions Ordinance and the Labour Relations Ordinance. It refers to "thL 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 trade 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".Conversely, a "lock-out" is "the closing of a place of employment, or the suspension of work, or the refusal by an employer to continue to employ any number of personsemployed by him in consequence of a trade dispute, done with a view to compe11ing those persons, or to aidinganother employer in compelling persons employed by him, to accept terms or conditions affecting employment".
These definitions hence restrict the legal ambit of "strikes" only to those of an economic nature, namely,
those stoppages which are attributable to trade disputes and pertaining to issues of employment. By implication, political strikes such as those in support of certain political or ideological causes, or aimed against the policy of the domestic or a foreign government, are generally excluded from the scope of officially recognised "strikes". It is permissible, none the less, for "sympathetic" actions to be considered within the scope of "strike", so that non-disputant employees considering their own interests to be at stake may strike against their own employer in order to bring pressure to bear upon another employer so as to coerce him into concessions in the dispute.
Present labour legislation, moreover, does not outlaw strikes. Initially, the Illegal Strikes and Lock-outs Ordinance, 1926, deemed illegal those strikes and lock-outs with "any object other than or in addition to the furtherance of a trade dispute within the trade or industry in which employers or employees are engaged" and which are "designed or calculated to coerce the Government either directly or by inflicting hardship upon the community or any substantial portion of the community". Nevertheless, such a concept of an illegal strike or lock-out has been abolished as a result of the repeal and replacement of the Illegal Strikes and Lock-outs Ordinance in 1975 by the Labour Relations Ordinance. Since then, the silence of statutory labour law on the legality or otherwise of a "strike" has been generally construed to imply that a strike is not illegal. Nevertheless, the Labour Department has cautioned that in the absence of a covering term in the contract, express or implied, a strike can be viewed at common law as a breach of contract unless it is preceded by due notice of an intention to terminate it. However, the merit of such a restrictive interpretation has so far not been tested in a court of law.
III.2.2 Law regulating the conduct of a trade dispute, strike or picketing
(a) Trade union immunities as regards the conduct of trade disputes
Following the British legal tradition, the laws in Hong Kong do not confer any positive right to strike upon employees. Nevertheless, the strikers, if acting in
contemplation or furtherance of a trade dispute, are protected by virtue of legally defined immunities from certain civil and criminal liabilities. The first is the freedom from the criminal implications of conspiracy and its civil liabilities, so that the Trade Unions Ordinance makes it explicit that "an agreement or combination of two or more persons to do or procure to be done any act in contemplation or furtherance of a trade dispute shall not be triable as a conspiracy if such act committed by one person would not be punishable as a crime". The act itself, it follows, is also not actionable. Secondly, immunities are also extended under the same Ordinance to absolve the torts of inducing some other person to break a contract of employment or of interference with the trade, business or employment of some other person or with the right of some other person to dispose of his capital or his labour at his own will. ,In effect, any court is expressly prohibited to act against any registered trade unions for any tortious act committed in connection with a trade dispute. However, whether the individual, either as a union official or member or just as an ordinary employee, is so entitled to this form of protection has not been spelt out under the law. The relevant interpretation may have to await court ruling upon submission from the parties; but so far a test case of this nature has not occurred.
(b) Legal rights of picketing
There are two legal sources that contribute to the definition of "picketing" rights in Hong Kong, namely, the Trade Unions Ordinance and the Public Order Ordinance.
The Trade Unions Ordinance stipulates the legitimate scope of peaceful picketing by declaring it -
lawful for one or more persons, acting on their own behalf or on behalf of a registered trade union or of an individual employer or firm, in contemplation or furtherance of a trade dispute, to attend at or near a place where a person works or carries on business, if they so attend merely for the purpose of peacefully obtaining or communicating information or of peacefully persuading any person to work or abstain from working.
This right to picket is, however, qualified by the legal proscription against the pickets to "so attend in such numbers, or otherwise in such manner, as to be calculated to intimidate any person in that place, or to obstruct the approach thereto or egress therefrom, or to lead to a breach of the peace". Such a "besetting" act is punishable as a criminal offence and liable on summary conviction to a fine of HK$1,000 and imprisonment for six months. According to the explanatory pamphlet published by the Labour Department, it may in this connection constitute a breach of the "picketing" provisions if -
the pickets violently and continually bang on doors, if they shout out, if they obstruct the highway by lying down in front of vehicles, if they make a show of violence, if they obstruct people in the road by standing in their way or catching their arms and compelling them to listen, etc.6
The statutory limit on the maximum number of pickets is, however, not specified. If more are employed than are reasonably required, the courts may infer that the intention is not bona fide and hence censure it. Presumably, the regulation on "reasonable numbers" has to be read in cojunction with the parallel provisions as contained in the Public Order Ordinance.
The same Ordinance, furthermore, outlaws the use of intimidation and annoyance as a means while picketing in the pursuance of a trade dispute. It will hence constitute a summary offence under the Trade Unions Ordinance if anyone who, with a view to compelling any person to abstain from doing or to do any act that the latter has a legal right to do or abstain from doing, "wrongfully and without legal authority uses violence to or intimidates such other person or his wife or children, or injures his property; or persistently follows such other person about from place to place; . . . or besets the house or other place where the latter resides or works or carries on business ..�E".
The ability to strike or picket in Hong Kong is, furthermore, qualified by the Public Order Ordinance, which regulates generally any possible breaches of peace in the community. Under the law prior to its amendment in 1980, if the strikers or pickets wished to hold a public meeting or procession in the course of industrial action, it was necessary for them, like all other persons, to apply for a licence from the Commissioner of Police, to be issued not later than seven days in advance for it to be effective. Otherwise, a public meeting or procession, if unlicensed, would constitute an unlawful assembly and the organisers and any participants would be then liable to a maximum penalty of five years' imprisonment. Even where the meeting or procession had been properly licensed, the police might still stop and disperse the gathering should there be a reasonable belief that a breach of the peace was imminent. A relatively stringent limit was also placed upon the number of participants permissible in gatherings. It would, in this connection, constitute an act of unlawful assembly for a minimum of three persons, irrespective of whether in public or in private, to assemble and conduct themselves in a disorderly, intimidating, insulting or provocative manner intended or likely to cause any person reasonably to fear such a breach of the peace.
Under the amendments of 1980 to the Ordinance, the old licensing system is replaced by a simpler notification procedure in order to hold a public meeting. The notice of intention to hold such a public meeting to the Commissioner of Police is mandatory, and has to be served at least seven working days in advance. The presumption now introduced is that the meeting under notice can take place unless specifically proscribed by the police. Prohibition can only be justified where: (i) the notice conflicts with the legal requirements; or (ii) the publication of advertisements of the meeting is found to be unlawful; or
(iii) the meeting, if held, is considered likely to prejudice the maintenance of public order or be exploited for unlawful aims; or (iv) the meeting's organiser has been convicted previously for an offence under the Public Order Ordinance.
On the other hand, it is still imperative for a licence to be issued in approval of a public procession that exceeds 20 persons. As for public meetings, the licence may be refused if: (i) any law under the Ordinance has in the past been infringed by the organisers; or
(ii)
the public procession has been advertised prior to its approval; or (iii) if the procession is liable to prejudice public order or be used for unlawful purposes. Where a licence has been granted, the licensee is obliged to be present at the procession from the stage of first assembly to that of the final dispersal, and to be responsible for complying with the conditions of the licence as regards the rules of formation, conduct, route, times of passing and dispersal of the procession as specified by the police.
(c)
Other legal limits on industrial conflict
The possibility of a strike ban has been introduced under the 1975 Labour Relations Ordinance, Part V of which -if brought into force -will empower the Governor in Council to declare a "cooling-off" period in respect of a trade dispute. Such an order will legally oblige both parties to the dispute, and any third party specified in the order, to discontinue or defer any industrial action or to resume normal work if a work stoppage or lock-out has already occurred; otherwise they could be held guilty of contempt and may be dealt with as if they had been guilty of contempt of the Supreme Court. The initial duration of the cooling-off order may not exceed 30 days, but the Governor in Council can extend its length to a total period not exceeding 60 days. Nevertheless, this power cannot be applied indiscriminately to curb an ordinary strike or industrial action, since its application is contingent upon certain specified conditions, as follows:
(a)
that, in contemplation or furtherance of a trade dispute, industrial action consisting of -
(i)
a strike; or
(ii)
any irregular industrial action short of a strike; or
(iii) a lock-out,
has begun or is likely to begin;
(b)
that the situation arising out of the trade dispute is of such a nature, or on such a scale, as to be likely to cause an interruption in the supply of goods or in the provision of services which might:
(
i) be gravely injurious to the economy of Hong Kong, seriously affect the livelihood of a substantial number of persons, create a serious risk of public disorder, or seriously jeopardise the internal security of Hong Kong; or
(ii)
endanger the lives of a substantial number of persons, or expose a substantial number of
persons to serious risk of disease or personal injury; and
(c) that, having regard to all the circumstances of the trade dispute, it would be conducive to a settlement of it by negotiation, conciliation, arbitration or the appointment of a board of inquiry if the industrial action were discontinued or deferred.
III.3 Machinery for settling industrial conflict
III.3.1 Claims or disputes over rights
Claims may be submitted to the Labour Department for voluntary conciliation by officers of its Labour Relations Service. The conciliation officer cannot require the disputants to attend the conciliation meeting nor can he dictate the terms of settlement. His primary task is to help the parties to locate the point where a compromise can be struck by persuading them to narrow their differences on conditions of offer and acceptance. Over the years, more than half of the claims brought before the Labour Relations Service have been resolved amicably by the conciliation method.
If conciliation fails to resolve a claim, the dispute may be referred under a certificate of conciliation by the conciliation officer of the Labour Relations Service to the Labour Tribunal for legal determination. The Labour Tribunal is competent only to hear disputes over rights, but not those of interests. As such, its jurisdiction is restricted to claims that arise from a breach of the terms of a contract of employment, whether for local performance or an overseas contract or in connection with alleged failures of legal duties under the Employment Ordinance.
The Labour Tribunal was created by the Labour Tribunal Ordinance, 1972, the intent being to create a quick, inexpensive and informal legal procedure for the adjudication of claims in respect of individual labour contracts. Claims are heard by a Presiding Officer, who is a career judge sitting alone in an informal manner, normally in public. The informality of the proceedings, first, precludes professional legal representatives from appearing on behalf of the disputants and, second, gives discretion to the Presiding Officer to conduct the
proceedings in either Chinese or English. Nevertheless, the Tribunal is able to permit a duly authorised officer of a registered trade union (either of employees or of employers) to represent the parties at the hearing. After all, the Tribunal is a court of record and belongs to the Judiciary. An award by the Tribunal is registrable as a judgement of the District Court and appeals from the decisions of the Tribunal may be sought from the District Court or the Court of Appeal on points of law.
III.3.2 Trade disputes
Voluntary conciliation by the Labour Relations Service of the Labour Department represents the basic and by far the most common procedure that has been responsible, on average, for the resolution of about 80 per cent or more of the recorded trade , disputes occurring in Hong Kong every year. Although the arrangement is fundamentally voluntary, as it is at the free will of the parties to the dispute to respond to the conciliation efforts of the official agency, the enactment of the Labour Relations Ordinance in 1975 has since given the process a mild degree of legal auspices. Under this law, the Commissioner for Labour is empowered, where a trade dispute exists or is expected to occur, to inquire into the causes and circumstances of the trade dispute; to take such steps as may seem expedient to him for the purpose of assisting the parties to reach a settlement of the trade dispute; and to authorise a conciliation officer to initiate or undertake conciliation.7 Should the trade dispute be settled by this method, a memorandum of the terms of the settlement must be made and endorsed by the parties and a copy of this instrument be delivered to the Commissioner for Labour. If, on the other hand, the conciliation attempts fail, the conciliation officer is required to report promptly to the Commissioner together with the various points of agreement as well as of disagreement between the disputing parties.
Special conciliation can then be authorised by the Commissioner for Labour upon the receipt of such a report, to be undertaken by a special conciliation officer who can either be a senior officer of the Labour Relations Division of the Labour Department, or any other public officer or a person who is so authorised by the Commissioner for Labour. The obligations of the special conciliation officer upon either settling or failing to settle the dispute in question are generally similar to those of a conciliation officer, as already noted.
Upon the exhaustion of the conciliation method (both ordinary and special), the Commissioner for Labour may recommend the Governor in Council, in accordance with the Labour Relations Ordinance, to refer the trade dispute either to arbitration or to a board of inquiry, in addition to the unspecified alternative of adopting such other actions as the circumstances of the trade dispute warrant. Arbitration, voluntary in so far as the consent of the parties is required, is conducted by an arbitration tribunal with its members drawn from a standing panel of arbitrators appointed by the Governor. The tribunal can consist either of a sole arbitrator or, alternatively, of three arbitrators. In the latter case, one of the arbitrators should be the chairman and a majority decision of two arbitrators will be sufficient to make an award. The award, upon its submission to the Governor in Council, must be published. In spite of the silence of the enabling statute on the matter, such an award is generally held to be non-enforceable at law.
As an alternative to arbitration, the Governor in Council may appoint a board of inquiry consisting of one or more members to investigate the causes and circumstances of the dispute. The inquiry board possesses similar powers to the High Court in summoning necessary documents, evidence and witnesses, but evidence given before the board is absolutely privileged and inadmissible in any other civil or criminal proceedings. The board's finding and recommendations, where appropriate, shall then be submitted to the Governor in Council and be published accordingly. The recommendations may or may not pertain directly to the formula envisaged for settlement, but at least they are expected to be instrumental for its formulation.
In spite of such statutory machinery for dispute settlement, arbitration or the appointment of a board of inquiry have so far not been invoked under the Labour Relations Ordinance. The major impact of the legislation, it appears, has been in laying down a legal framework whereby collective industrial conflict can be settled under a non-coercive form of official intervention.
H.A. Turner et al., The last colony: But whose?, Cambridge: Cambridge University Press, 1980, pp. 38-39.
2
Calculations based upon Registrar of Trade Unions, Annual departmental report, 1979-80, table 2.4 (p. 58); Commissioner for Labour, Annual departmental report, 1979, table lA(I) (p. 44).
3
Allan Flanders, "The nature of collective bargaining", in A. Flanders (ed.), Collective bargaining,
Harmondsworth: Penguin, 1969, pp. 19-22.
4 For detailed exposition, see Joe England,
"Strategic factors in trade unionism and industrial
disputes in Hong Kong", in Labour and society (Geneva, International Institute for Labour Studies), Vol. 5, No. 3, July 1980.
5 David A. Levin, "Industrial conflict in Hong Kong: Recent trends", in Japan Institute of Labour (ed.), Social tensions and industrial relations arising in the industrialisation process of Asian countries, Tokyo, 1979, pp. 165-166.
6 See Labour Department, Strikes, strikers and the Law, Hong Kong, 1976, pp. 4-5.
7 As defined by the Labour Relations Ordinance, a conciliation officer refers to an officer of the Labour Relations Division of the Labour Department who is thus authorised to initiate or undertake conciliation.
CHAPTER V WORKPLACE INDUSTRIAL RELATIONS
I. JOINT CONSULTATION IN THE ENTERPRISE
I.l Background
After 1967, in the aftermath of the civil upheavals that were heralded by bitter industrial strife, the Government enhanced its efforts to sponsor the improvement of collective labour relations in the private sector. A promotional campaign was launched, aimed at encouraging the larger enterprises (normally those employing more than 100 persons) to establish joint consultative committees as a means of institutionalising labour-management communication inside the establishment. This version of joint consultation was adapted from the British orthodQx model which was developed during the Second World War to enhance productivity.
!.2 Practice and problems in Hong Kong
The introduction of joint consultation by private companies as a voluntary rather than a mandatory measure seemingly lacks the support of both the employers and employees. In effect, the active practitioners of formalised joint consultation are largely limited to major British companies, public utilities and government departments work organisations that are part of the British heritage or have links with the United Kingdom. At the beginning of the 1980s, the Labour Department was able to report the operation of less than 100 formal consultative committees in only about 30 establishments covering some 60,000 workers.
111
The limited success of the joint consultation experiment in Hong Kong enterprises can be attributed to a variety of causes. These have been swnmarised in a 1981 survey report by the Hong Kong Institute of Personnel Management (HKIPM), Management/employees communication, consultation and negotiation in the private sector:
Firstly, there are problems inherent in the highly circumscribed role and power of the consultative model proper. A critique of the British situation as follows is probably acceded to by many observers in Hong Kong as well:
Because the committees had no power to negotiate and no authority among the men or in the management structure, they were left essentially as suggestion committees composed of union at1d management officials with little or no contact with the general labour force. Again, because of their known reluctance to take action and the limited number of subjects with which they were empowered to deal, both committees were little used as channels for complaints.
Secondly, in the local context of Hong Kong, the small size of business undertakings probably places a practical constraint on the extent to which the relatively formalized arrangement of joint consultative committees can be operational. In the small enterprises, it is more appropriate, it is argued, to utilize the simple and less informal means of labour-management communication.
A third set of explanations refers to the serious dearth of any faith or commitment for both sides of employment in the institution of joint consultation for workplace dialogue. Most managements are observed to be suspicious towards the consultative system as posing an inroad into their traditional prerogative. Accordingly, they are relucta.nt to concede to it any power substantially beyond mere window-dressing or peripheral use. On the other hand, the employees at the grass-roots level are also apprehensive of the often ambiguous functions of the consultative system. Either because of sheer apathy or for fear of being castigated as employers' agents, workers are allegedly cool or even resistant in accepting election or appointment to deputise for their fellow employees on these joint consultative committees.
All these contentions were echoed to a mild degree by the views canvassed among those firms in the survey which regarded joint consultation as a rather unlikely prescription for Hong Kong in terms of sustaining the communication bridge between employees and management at the average workplace. These reasonings, which in addition cited the so-called "characteristic" disinterest of the Hong Kong workers in the collective and representative types of expression, seemingly suggest a low future profile of the institution in the context of workplace relationships in Hong Kong enterprises. 1
Nevertheless, local experience with joint consultation is not entirely perfunctory. According to the HKIPM survey, all except one of the 19 enterprises instituting joint consultative committees were satisfied or very satisfied with this workplace arrangement.2 The study concludes that the readiness of management to give joint consultation a measure of joint decision-making authority was probably important to make it a workable device in the practising firms. One possibility was the "fusion and overlap between wage negotiation and joint consultation", practised sporadically as a "local adaptation of labour-management institutional arrangement to the comparatively undeveloped state in Hong Kong of collective bargaining that was normally carried through the trade union agency in other industrial societies".3 Thus, nine out of the 19 companies departed from the orthodox model of joint consultation with considerable flexibility to incorporate implicitly the "wage" dialogue: "three of them conceded to the use of the machinery as a de facto body for wage negotiation, leading to eventual labour-management agreements; the other five tended to use wage consultation more as litmus to gauge opinions than vesting the process with any prerogative to reach decisions on pay matters".4 Other topics discussed within these 19 establishments under the joint consultative arrangement included:
(i)
work schedules, shift arrangements and other procedures governing task operation;
(ii)
working conditions and environment;
(iii) employee fringe benefits and welfare amenities, including recreation, transport, canteen and meal provisions, etc.;
(iv)
occupational health and safety;
(v)
employee training and career development;
(vi)
employee discipline, morale and labour/staff relations at the workplace.
There existed no uniform practices among these 19 establishments on the selection of representatives to the employee or staff side of these joint consultative committees. However, the majority of them (11 out of 19) claimed to have instituted democratic procedures whereby the representatives we~e elected by the employees themselves. The rema1n1ng eight companies adopted, instead, a mixed approach by combining both the election and the appointment methods in the determination of employee representation on their joint consultative committees. These employee delegates might sit together on a single committee representing the entire workforce across the spectrum of diverse occupational or departmental groups in the enterprise. However, the more common approach was to operate either a dualistic structure, with one committee catering to the manual employees and the other serving the non-manual staff, or a multi-committee system whereby separate forums were provided for different grades of staff.5
II. WORKPLACE INDUSTRIAL RELATIONS AND PERSONNEL PRACTICES
The actual conduct of labour-management communication in Hong Kong tends to assume various forms between different workplaces. According to the HKIPM survey mentioned above, the use of written notices and circulars probably represented the most popular form of communication among enterprises. Another method of mass communication widely practised, especially among the larger firms and the non-manufacturing establishments, was the publication of company news bulletins or house journals. On the other hand, face-to-face collective means of labour-management communication (aimed at reaching the grass-roots level involving either informal discussion groups, on-the-spot briefing sessions or production and services unit meetings)
were also cited as common methods for achieving dialogue at the workplace. Generally speaking, the less structured or less formal the practice. the more 1ikely for it to be applied by employers. The underlying assumption seemed to be that these unstructured and informal approaches would better enable management to maintain a certain degree of flexibility as well as to achieve rapport with the rank-and-file workers.
Such general preference for the ad hoc and informal types of arrangement on the shop-floor contrasts remarkably with the paucity of institutionalised workplace representation, as operated under a system of joint consultation or other labour-management joint committee or council. Both the findings of the HKIPM survey and official statistics cited earlier on the practice of joint consultation suggest that the application of formalised machinery for labour-management dialogue and joint decision-making in Hong Kong is relatively rare.
The variability of personnel practices and strategies between different enterprises is probably endemic in the "open market system" of Hong Kong. In this connection, Thurley observes that "given the weakness of unions in controlling work relations and the emphasis of the Government on providing an adequate dispute and mediation service, then the nature of employee-employer relations will depend on the philosophies of personnel management which are held by companies and their competitive situation and business strategies".6 Thus, diversities of personnel management practices may stem from differences in ownership, industry and size characteristics. England and Rear have attempted (first in Chinese labour under British rule, 1975, and later in Industrial relations and law in HQ;g Kong, 1981) to represent the range of these employment situations by constructing a typology of work organisations according to size, form and ethnic origin of the firm's capital.7 These include:
(i)
small, privately owned Cantonese enterprises;
(ii)
large, privately owned Cantonese enterprises;
(iii) large, privately owned Shanghainese enterprises;
(iv)
multinational enterprises (especially United States owned);
(v)
joint-stock British companies;
(vi)
government enterprises.
Each of these sub-types is described briefly below.
(i) Small, privately owned Cantonese enterprises
The small Cantonese shops are typically family owned and managed by local Hong Kong Chinese or post-war immigrants from southern China. The owner-operator is commonly a member of the work crew on the shop-floor. "There is no management hierarchy, discipline is free and easy, and communications between worker and employer are personal and swift." Many of these small shops depend upon a core Qf family labour and skilled permanent workers. But additional manpower is acquired normally by way of labour subcontracting or the piece-work system in order to cope with seasonal variations in market and production demand. The employment conditions of these temporary "marginal" workers feature low pay, long hours and minimal job security. In their turn, the majority of these workers have little or no loyalty to any firm or industry and are mobile between firms in response to even minor pay advantages.
(ii) Large, privately owned Cantonese enterprises
Financed by local capital and ranging in employment size from 50 to 1,000 employees, this type of firm is largely concentrated in such manufacturing activities as plastics, garment-making, knitting, textiles, food, machining and light engineering. England and Rear estimate that about 40 to 50 per cent of the industrial labour force is engaged in these enterprises where, because of the growth in size, workplace communication between management and workers becomes indirect and is strategically dependent upon the foreman or floor supervisor for its maintenance. The philosophy that pervades this type of Chinese management is still the idea of personal paternalism -an autocratic yet benevolent leadership style adapted from the tradition of patriarchal control in the Chinese family. Like the small Cantonese shops, these firms also emphasise the provision of short-term financial incentives to their workforce, whose commitment to the employing organisation again varies according to whether they are members of the
permanent core or the temporary labour pool. It appears that the permanent workers in this type of employment situation may have greater security and higher monetary rewards, although fringe benefits and holidays are usually no more generous than in other types of enterprise.
(iii) Large, privately owned Shanghainese enterprises
These companies, whose history in Hong Kong mainly dates back to the late 1940s and 1950s, possess the capital, skills, market and technical knowledge and entrepreneurship transferred from Shanghai following the Chinese Revolution in 1949.
To a certain extent, these Shanghainese enterprises can also be viewed as the vehicle of mor,e established systems of employment practices that have subsequently contributed to the development of personnel administration and management in Hong Kong. They are known, for instance, to be more conscious of better-organised approaches to the commitment and retention of the labour force with elaborate fringe benefit and security schemes. As England and Rear describe, "unilaterally granted welfare benefits in some of these factories are substantial. Most provide free or subsidised meals, and dormitory accommodation is available for a large proportion of single workers, while subsidised flats are provided for some of the married workers who are known to be of 'good conduct'".8 Medical care is available at some of the factories, while transport to work or transport allowances are also sometimes provided. Workers can usually borrow money for special occasions weddings and funerals -and recreational amenities or even schools for their children are not unknown. Some of these practices are a carry-over from the Shanghai of the 1920s and 1930s when the employers need to recruit, maintain and discipline labour led to their adoption.9
(iv) Multinational enterprises
The practice of "scientific management" is perhaps most developed by the local subsidiaries of American multinational enterprises -visible in such industries as electronics, plastics and garment-making. The assembly-line workers, mostly semi-skilled young women, are typically hired on a daily rated basis but are subject to a high degree of supervision on the shop-floor to ensure that production is maintained. In most plants, the workplace is
air-conditioned, clean and spacious; the workers are well
provided with amenities like subsidisd meals, free
transport to work, social activities and personnel
counselling services on their work grievances as well as
personal problems. However, management is generally
reticent about workers' organisations. As England and Rear
remark, "there is little interest in joint consultation;
trade unions are not tolerated".
10
(v) Joint-stock British companies
These are British firms locally based and engaged in a wide variety of commercial and industrial activities including the franchised public utility sector. The prevailing attitude of these firms towards employment is one of paternalism. A number of fringe benefits are typically provided, such as paid sick leave, long paid annual leave, a retirement gratuity, free or subsidised accommodation, and free or subsidised medical treatment for the employees and, in some cases, for their dependants too. What is distinctive about the employment policies of these companies is their explicit and formalised codification, based upon contractual norms rather than personal ties. Many of these firms institute an elaborate system of personnel management, providing written contracts of employment, including detailed company rules and personnel practices -often circulated to the staff in the form of employee handbooks.
(vi) Government enterprises
The Government, as in other countries, has a dual significance in the formulation of employment norms; it is both an employer of civil servants as well as the legislator of labour rules and regulations for the whole economy. As the largest employer in Hong Kong, it has been increasingly looked upon as the pattern-setter for non-mandatory "good employment" practices in the private sector. In this respect, government employees enjoy better job security, a shorter basic working week, and higher pension benefits as well as a host of welfare items that include, inter alia, paid sick leave and maternity leave, an educational allowance for children, free medical care, a housing allowance and living quarters. In general, there is no opposition to civil servants associating for union purposes, and in fact the Government is fairly positive in encouraging trade unionism among its staff. Joint
consultation is commonly practised at the departmental level, whereas at the central level, the major general civil service unions are recognised for the purposes of a mild form of collective bargaining within the framework of the Senior Civil Service Council.
III. MANAGEMENT'S PERCEPTION AND RECOGNITION OF TRADE UNIONS
To a certain extent, the passivity of the trade unions in the average workplace also finds an explanation in the attitude of the employers. The image of weak union presence in individual enterprises was largely confirmed by the 1981 HKIPM survey, which revealed the operation of a union in only 14 of the 61 establishments investigated
(i.e. 23 per cent). Consistent with earlier discussions in Chapter III, most trade union activities were found "to concentrate on the non-industrial sector with the large establishments notably in the public utilities which represented one of the most organised sectors of the economy". 11 Also characteristic of the local state of multi-unionism, the presence of more than one union at the workplace was reported by five out of these 14 enterprises.
Union recognition was problematic, inasmuch as just eight of these enterprises claimed to recognise their unions. Even among these eight companies, the practice of union recognition varied considerably. In some cases, recognition was formalised under regularised procedural arrangements, involving an agreement or other instruments that specified mutual obligations. However, in other cases, the status and capacity of the union vis-a-vis management was less explicit, as merely implied from informal practices.12
Apart from this minority of eight-cases, managements in this sample were either overtly reluctant to recognise unions or, at best, ambivalent and non-committal on their stance. The analysis by the HKIPM report of its survey findings was illuminating:
When asked to visualise a union situation in future, 47 companies in the sample currently working without a trade union expressed a generally conservative stance towards the issue of recognition. The majority, or 55 per cent of these 47 enterprises, disclosed little or no readiness to recognise the union in the event that
it should emerge In dismissing the role of a trade union, there was, furthermore, a common faith placed by some of the respondent management in the efficacy of the corporation's personnel and staff policies and systems in accommodating the needs of their employees. Moreover, scepticism was also expressed by some companies towards the more fundamental issue of whether their employees would develop sufficient interest in union organisation.13
In this connection, despite the legal provisions against anti-union discrimination by employers, the dubious, suspl.Cl.ous and even apprehensive attitude of most managements in Hong Kong enterprises has been hardly conducive to the advancement of trade union activities in most workplaces, quite apart from the weak organisational resources of most unions at the enterprise,level.
Hong Kong Institute of Personnel Management, Industrial relations survey: Management/employees communication, consultation and negotiation in the private sector, Hong Kong, 1981, pp. 16-17.
2 ibid., para. 3.9, p. 9. These 19 establishments accounted for 21.8 per cent of the total 78 cases of joint
consultation registered with the Labour Department in 1980 and, accordingly, could be deemed "fairly representative of how joint consultation has been working in Hong Kong". ibid., para. II.lO, p. 18. The incidence of joint consultation was also found to be biased towards British-style management, as well as clustered among non-industrial establishments that exceeded 500 employees in size (13 out
of 19 practising firms were in this category). ibid., para. 3.2, p. 7.
3
ibid., para. 3.9, p. 9.
4
ibid., para. 3.4, pp. 7-8.
ibid., paras. 3.6 and 3.7, pp. 8-9.
Keith Thurley, "Concluding remarks", in David Levin and Ng Sek-hong (eds.), Contemporary issues in Hong Kong labour relations, Hong Kong, Centre of Asian Studies, in press.
7
See Joe England and John Rear, Chinese labour and British rule, Hong Kong: Oxford University Press, 1975, Ch. 12; idem., Industrial relations and law in Hong Kong, Hong Kong, Oxford University Press, 1981, Ch. 5 and 6.
8
England and Rear, Industrial relations and law in Hong Kong, op. cit., p. 84.
9 Hong Kong Institute of Personnel Management, op. cit., para. 4.2, p. 10; see also paras. 4.1 to 4.6.
10 England and Rear, Chinese labour under British rule, op. cit., p. 264; idem., Industrial relations and law in Hong Kong, op. cit., p. 93.
11 Hong Kong Institute of Personnel Management, op. cit., para. 4.1, P�P 10.
1 2 ibid., para. 4.2, P�P 10.
1 3 ibid.' para. 4.2, p. 10; see also paras. 4.1 to 4.6.
CHAPTER VI WORKING CONDITIONS AND WAGES
I. INTRODUCTION
It has been mentioned in earlier chapters that working conditions in the private sector were subject to relatively scant legal regulation prior to the turn of the 1970s, with the probable exception of women and young persons engaged in industry, whose hours of work, rest days and pauses were cntrolled by the British-based regulations contained in the Factories and Industrial Undertakings Ordinance. During the 1950s, long hours in excess of eight a day and 48 a week were the norm in industrial establishments outside the Government and European enterprises. The dearth of labour standards governing holidays and rest days was conceded by the Commissioner for Labour when he noted in his 1951 report that holidays were normally not granted by the majority of smaller Chinese shops, factories and workshops unless for "the Chinese New Year, Ching Ming, and perhaps at some of the seasonal festivals, especially those connected with the trade or industry itself".1 "Sundays are very seldom observed, and as a result, work in the Colony goes on almost without interruption the whole year round, often without machines stopping even at night."2
During the 1960s, official intervention to regulate working conditions in the private sector still remained sparse, apart from the enactment of the Industrial Employment (Holidays with Pay and Sickness Allowance) Ordinance, which provided for six annual holidays and a sickness allowance of up to 12 days a year on half pay, available to workers irrespective of sex and age in industrial establishments. In short, protective labour legislation, where it existed, applied mainly to the industrial sector only. Except for the provisions on workmen's compensation, statutory intervention in the
123
non-industrial sector on hours of work, holidays and rest days did not appear until the Employment Ordinance of 1968 and its subsequent amendments,3 which gradually introduced a scheme of m1n1mum employment rights with maternity leave, wage protection redundancy, termination of contract and other job security measures. The Employment Ordinance became the principal statute governing all "rules of a social nature relating to employment".
II. CONTEMPORARY PATTERN OF WORKING TIME AND HOLIDAYS
II.l Hours of work
The non-interventionist philosophy of the labour administration, despi~e its reformist tendencies since the late 1960s, has left the key issues of general wages and hours of work basically unregulated except for special categories of protected employees like women and young persons in industry. However, improvements in industrial conditions and the norm-setting effects engendered by the statutory standards prescribed for these groups of workers have contributed to the progressive and voluntary reduction of working hours for adult male workers in industry, as well as for non-industrial employees in general. The General Household Survey conducted by the Census and Statistics Department for the period July to September 1984 reveals the overall average hours of work to be about 46 a week. An earlier survey conducted by the Census and Statistics Department in 1975 showed that 55 per cent of employees worked eight hours or less a day; 30 per cent up to nine hours;�P 9 per cent up to ten hours; and only a sparse 2 per cent and 4 per cent worked for up to 11 and 12 hours respectively. It has become increasingly common for factories to introduce schemes for a shorter working week of five to five-and-a-half days (or 44 to 48 hours) without entailing any reduction in wages. Of course, hours of work actually vary extensively between different occupations and industries: sales and service trades, wholesale and retail businesses, and restaurants and hotels have the longest working day, vis-a-vis the financial and business sector where employees generally work the shortest daily and weekly schedule.
On the other hand, women and young workers engaged in industry are subject to legally stipulated standard or normal hours of work as defined by the Women and Young
Persons (Industry) Regulations (introduced in 1980 under the Employment Ordinance to replace the comparable regulations under the Factories and Industrial Undertakings Ordinance). At present the standards are eight hours a day and 48 hours a week, beyond which any working time is reckoned to be overtime and, as such, must be notified in advance to the Labour Department. Other details covering the statutory protection of these workers in industrial employment will be discussed in Chapter VII.
The compensation rate for overtime work is not fixed by law, either economy-wide or for any specific industries or categories of employees. However, voluntary practice in private industry tends to pay for overtime work at rates higher than the normal daily rate (usually at 150 per cent or even higher), although the rates vary considerably between different trades and industries.4
1!.2 Rest days
The provision of rest days was introduced as a general standard of working conditions in 1970 under the auspices of the Employment Ordinance. Its Part IV now entitles all manual workers, irrespective of wages, and all non-manual workers whose wages do not exceed HK$9,500 a month, to one rest day in every seven days -in other words, almost a weekly rest day. Women and young persons in industry are nevertheless accorded greater protection in terms of rest day entitlements under a separate, albeit related, enactment, the Women and Young Persons (Industry) Regulations.
A rest day is defined by the Employment Ordinance as a "continuous period of not less than 24 hours, during which an employee is entitled to abstain from working for his employer". To qualify for one rest day in every period of seven days, the employee must have a continuous contract of employment with his employer by having completed at least four weeks' service, during which he must have worked at least three days a week and six hours a day. The Ordiance does not stipulate whether rest days should be paid or otherwise. Instead, pay for rest days is dependent upon the express or implied conditions in the respective contracts of employment, whether oral or written. It is common for monthly rated employees, whose wages are usually not deducted for rest day absence, to be paid for rest days, whereas piece-rated or daily rated employees are generally not paid for rest days on which they do not work.
Rest days are to be assigned by the employer to the employees and can either occur on a regular basis (such as on a particular day of the week or on fixed days of the month) or be assigned on a rotational basis, provided that they take place once in every seven-day interval. In the former case, it is sufficient for the employer to inform his employees accordingly. Should the latter practice be adopted, the employer must inform all his employees of the appointed rest days during the month before it commences. He may do this orally or in writing, or by displaying a roster showing the dates of the appointed rest days for each employee.
With the consent of the employee, an employer may substitute some other rest day for the original appointed rest day. In such cases, he must appoint a substitute rest day either within the same month and before the original rest day or within 30 days thereafter. In�P the event of a breakdown of machinery or plant or in any other unforeseen emergency, the employer may require the employee to work on the original rest day, but he must, within 48 hours, notify the employee of the date of the substituted rest day, which must be taken within 30 days following the original one. Such substitution allows a measure of flexibility, especially to enable small-scale industrial enterprises to cope with the exigencies of their seasonal production that has to be highly responsive to fluctuations in overseas demand.
Voluntary work on rest days is permissible under the Employment Ordinance. An employee may, at his own request and if his employer agrees, work on a rest day. Reciprocally, an employer may ask an employee to work on a rest day, and the latter is free to consent or otherwise. In spite of this flexibility, an employer cannot compel an employee to work on a rest day except in an emergency like the breakdown of machinery or plant. Work on a rest day should be reckoned as overtime work and should be remunerated accordingly.
The Employment Ordinance also nullifies certain attempts by the employer to induce or coerce his employee to work on rest days. For example, under the legislation, any condition in a contract of employment is declared void if it makes the payment of any annual bonus (e.g. a Chinese (Lunar) New Year bonus) conditional on an employee agreeing to work on his rest day.
II.3 Statutory holidays
In the 1960s, statutory holiday arrangements were applicable to industrial employment in the manufacturing sector alone. These legally prescribed benefits were later extended to non-industrial employees when the industry-specific Industrial Employment Ordinance
(Statutory Holidays and Sickness Allowance) was repealed in 1973 and replaced by an enactment amending the Employment Ordinance.
Today, under the Employment Ordinance, non-manual workers earning not more than HK$9,500 a month and all manual workers regardless of earnings are entitled to 11 statutory holidays a year.
If the employee has worked continuously for his employer for three months preceding the holiday, he is entitled to payment for these statutory holidays. The daily holiday rate is equal to the normal wage (i.e. excluding overtime pay) for that day or, in other cases, equivalent to the average daily wages earned by the employee during the period of 28 days preceding the holiday. Payment of holiday pay must be made on the normal pay day and an employee must be given holiday pay even if he does not take the holiday.
An employer who fails to grant his employee any holiday or give him the holiday pay due is liable to prosecution under the Employment Ordinance.
II.4 Other public holidays
In addition to Sundays, there are 17 official public holidays in a year as designated under the Holidays Ordinance, a piece of legislation whose existence pre-dates the more recent enactments on statutory holidays, rest days and annual leave under the aegis of the Employment Ordinance. The Holidays Ordinance, in spite of its
non-mandatory nature, is widely applied in the collllllercial and service sector as normal employment practice, especially among white-collar employees, However, the dual system of holiday arrangements has led to growing confusion, as the Employment Ordinance introduced progressively the mandatory package of rest days, statutory holidays and annual leave. The disarray has led to a review of the two sets of legislation with a view to harmonising their respective provisions.
II.S Annual leave
The Employment Ordinance was amended in June 1977, introducing the prov1s1on of paid annual leave as a statutory employment benefit, now available to every manual worker regardless of earnings and those non-manual workers earning less than HK$9,500 a month. It was made explicit that the leave could not be replaced by payment in lieu and that an element of consecutivity in leave-taking was imperative.
The law taking effect from 1 January 1978 hence entitles the employee to at least seven days of annual leave with pay, after he or she has served 12 months of employment under a continuous contract with his employer. The time of the leave, to be appointed by the employer after consultation with the employees concerned or their representatives, must be notified in writing to the employees at least 14 days in advance, unless a shorter period has been mutually agreed upon.
Broadly speaking, paid annual leave can be granted and taken in two alternative ways. First, there may be a period of not less than seven consecutive days of absence from work or, second, the employee may be granted a minimum of four consecutive days of annual leave, with the rema1n1ng days of annual leave taken at another time, either consecutively or separately, during the same 12-month period. This latter arrangement, however, is permissible only at the request of the employee concerned. Should the employee fall sick or sustain injury resulting in incapacity, his consequent period of sick leave shall not be counted as part of a period of annual leave unless it commences after the annual leave has started. On the other hand, in the instance of a pregnant female employee, the annual leave may not be taken concurrently with maternity leave, but shall be granted in addition to and outside the period of maternity leave itself.
An employer may choose to close down his business or part of it for the purpose of granting his employees paid annual leave. Rules of plant or business shut-down depart from the above general provisions inasmuch as:
(i) a longer period of notice is required, calling for one month's notice in writing to all employees who have to take annual leave or stop work during this period of closure. Such a
notice containing the names of all employees thus affected, or identifying them, say, by sections or departments, must be exhibited conspicuously in the place of employment;
(ii) every employee covered by the Employment Ordinance who has otherwise not qualified for annual leave on account of insufficient length of continuous service, but who has to stop work due to the closure, shall also be granted the days involved as paid annual leave. Such leave has the same effect as that granted in respect of a period of 12 months' employment under a continuous contract ending immediately before the period of closure.
III. WAGES AND BONUSES
III.l Wage levels
In their review of the general wage movements during the 1960s and 1970s, Turner et al. conclude that:
(
i) nominal daily wages rose by 140 per cent during the nine-year period between August 1964 and early 1973. Deflated by consumer price increases, which accounted for about half the rise, real wages increased by close to 60 per cent, yielding an estimate of about 5.5 per cent annual increase in real wages over that ten-year period;
(
ii) "the real wages of Hong Kong industrial workers rose about two-thirds over the 15 years to 1978", so that there has occurred "a real rise in living standards; the more so since the relative increase in public expenditure over the period was substantially due to improved housing and social services".5
This n.s1.ng trend of real wage levels continued until the beginning of the 1980s, when domestic prices were pulled up by inflated consumption and the booming property market, whilst the labour market was dampened by the massive influx of immigrants from China -most of whom belonged to the working age groups. Between 1981 and 1982, industrial wages were found to have advanced by 38 per cent in real terms over 1973-74 as the base year, giving an average increase of 4.7 per cent each year. The virtual stagnation of real wage growth since 1980 is indicated by a comparison of industrial real wage levels over the five-year period between 1978 and 1982 (table VI.l).
Table VI.1 Index of nominal and real average daily wages (including fringe benefits) in the manufacturing sector, 1978-82 (March 1982 =100)
Nominal Percentage Real Percentage wages change over wages change over past year past year
1978 Mar. 55 13.8 90 8.8 Sep. 59 16.1 94 10.3
1979 Mar. 66 20.3 101 12.2 Sep. 69 16.4 96 3.1
1980 Mar. 75 13.5 98 -2.9 Sep. 80 15.7 97 0.8
1981 Mar. 86 14.4 99 1.5 Sep. 93 16.4 99 2.3
1982 Mar. 100 16.0 100 1.0 Sep. 103 10.8 98 -1.0
Source: Hong Kong Government, 1982 Economic background, 1982, table 4.6, P�P 42.
The erosion effects of rampant inflation at the beginning of the 1980s were overt during the year 1980-81, when the average daily industrial wage increase was reduced from a nominal 16.4 per cent to a modest real increase of
2.3 per cent after adjustment against the consumer price index deflator. As a result of slowed-down inflation and stabilisation in the expansion of the labour supply owing to immigration control, wage rates in the manufacturing sector showed a small improvement in real terms in the first part of 1982. This tendency was soon reversed later in the year, with the onslaught of the global recession that began to curtail the domestic export sector.
Using 1973-74 as a base year, the statistics shown in table VI.2 illustrate substantial variations between different manufacturing industries in the extent of real
wage increases. Improvements occurring electronics and plastics industries significant than in others. in the printing, have been more
Table IV.2 Increases in real wages in various industries
1973/74-82
Industry Percentage of real wage increase 1973/74-82
Textiles 39 Electrical appliances 32 Electronics 58 Garment-making 34 Gloves 15 Plastic products 50 Printing 66 Plastic flowers and toys 27
Source: Government of Hong Kong, 1982 Economic background, 1982.
This tendency of mild increases in real wages persisted more or less into the mid-1980s. During 1984 and 1985, there was limited growth in wage and earning levels across the economy, both in money and in real terms. For the 12-month period preceding September 1984, for instance, the overall economy registered a nominal increase of 8.7 per cent in money wages, or 1.5 per cent in real terms. In September 1984, 75 per cent of industrial manual workers (in manufacturing) earned a daily wage of HK$74 or more, whereas 25 per cent obtained a daily average of HK$106 or more -yielding an average overall daily wage of HK$91 for the manufacturing sector.
Inter-sectoral comparison of employees' earnings suggests that, by the middle of the 1980s, the tertiary service sector was generating by far the fastest pace of growth and, by implication, was yielding the highest percentage of pay increases. Between June 1984 and June 1985, the average wage in the service sector improved by
9 per cent in money terms or 6 per cent in real terms, vis-a-vis an increase of 7 per cent in money terms or 4 per cent in real terms recorded for the manufacturing sector. By contrast, the building and construction sector yielded the lowest margin of increase. During the period, construction wages rose only by 4 per cent in money terms or 1 per cent in real terms.
III.2 Wages and earnings differentials
This section brings into focus the pattern of differentials in pay, bonuses and other items of remuneration resulting from occupational, industrial and skill differentials within the labour force.
It was mentioned earlier that the lower profitabilicy of manufacturing vis-a-vis other sectors has contributed to the lower level of industrial pay.6 Turner et al. present the following inter-sectoral comparison of monthly earnings (excluding fringe benefits) of employees from the data of their 1976 survey (based upon the 1973 Census of Industrial Production):
Manufacturing 808 Commerce 917 Construction and engineering 1 060 Transport and communications 1 244 Services (including government) 1 325
There was a corresponding variation in the average labour costs per person between these sectors, such as:
Manufacturing 8 859 Mining and quarrying 15 625 Electricity and gas 18 176
Corroborative evidence also emanates from the earlier analysis by Hsia and Chau of the income data yielded by the 1971 Hong Kong Population and Housing Census. In the "blue-collar manual workers" group, the researchers identified three distinctive features: "Firstly, both their income levels are markedly lower than other occupational groups. Secondly, among them manufacturing
workers have an average income appreciably lower than that of manual workers in transport and other services. Lastly, there appears to be very little difference in income distribution between workers belonging to different manufacturing industries."7
Skill differentials, on the other hand, are complex and occasionally inconsistent, as they are compounded by factors like age, sex, the nature of the employing firm and its employment/pay policy. For instance, "in some manufacturing industries where large numbers of low-paid semi-skilled workers are employed, skilled men's pay generally appeared higher". Conversely, in certain high-wage sectors (like utilities and stevedoring) "differentials were apparently compressed to the point at which skilled men were paid less than their counterparts outside".8 Aoove all, official basic wage and income data enabled both Hsia and Chau, and Turner et al., to compute a fairly coherent hierarchy of skill-based differentials (table VI.3). Nevertheless, when bonuses, allowances, fringe benefits and other i terns were added to basic wages, these skill differentials became distorted in Turner et al.'s survey (see Turner et al. (b)).
One plausible explanation for the compression of skill differentials might be the large proportion of skilled workers on daily rated casual engagements, the bonus earnings of less-skilled production workers, and lower earnings in some small-scale craft trades. It has been mentioned in earlier chapters that in general bigger firms offer higher earnings, as well as superior fringe and welfare benefits, than do small ones. These small-scale enterprises are more likely to be locally owned businesses and Cantonese (i.e. of the Kwantung Province in southern China) in or~g1n. According to Turner's survey on the composition of workers' bonuses, allowances and welfare benefits, these Cantonese firms were more ready than other employers to offer good attendance bonuses and meal allowances, i.e. short-term cash supplementary payments; but they were rather lacking in the provision of long-term benefits such as pensions and other fringe benefits (e.g. medical care and sickness allowance/pay). The variations between establishments of different ownership are shown in table VI.4.
Correspondingly, industrial practices differ considerably between the major economic sectors in terms of the components of these supplementary payments. For
Table VI.3 Skill-based differentials: Two estimates
Hsia and Chau:
Type of worker Mean income per month (HK$) Growth (%) Sep. 1968 Mar. 1973
Technician 775 1 275 65 Craftsman 465 890 91 Operative 363 735 102 Unskilled 281 597 112
Source: Laurence L.C. Chau, "The size and profile of poverty in Hong Kong", in Leung Chi-Keung et al. (eds.), Hong Kong: Dilemmas of growth, Hong Kong, Centre of Asian Studies, 1980, p. 159.
Turner et al.:
(a) Men's average basic wages by occupational level, Mar. 1977 (HK$)
Type of worker Daily rated Monthly rated
Apprentice/trainee 20 471 Labourer/general worker 24 714 Skilled 33 1 080 Foreman/supervisor 37 1 381
(b) Average monthly earnings (including fringe benefits) by job status/skill
Type of worker HK$
White-collar, technician 1 284 Foreman, supervisor 1 467 Skilled 786 Semi-skilled 791 Unskilled 776
Source: H.A. Turner et al., The last colony: But whose?, Cambridge: Cambridge University Press, 1980, pp. 78 and 79, and table 7.11.
Table VI.4 Percentage of emElo~ees receiving bonuses1 allowances and welfare benefits b~ ownershiE grouE
Bonus, Government Cantonese Shanghainese British Other allowance or benefit
Chinese New Year bonus 46 55 77 71
Paid holi-days above statutory minimum 100 25 22 68 55
Attendance bonus 39 58 7 33
Subsidised meals 3 46 37 36 47
Pensions or provident fund 94 3 13 55 28
Medical care/sick pay 98 10 so 40 44
Recreational 54 16 19 25 34
facilities
Source: Turner et al., op. cit., table 7.14, p. 81.
instance, it is common for an attendance bonus and an efficiency bonus to accrue to industrial workers in manufacturing, although the formulae are variable. On the other hand, the provision of living allowances for employees and education allowances for their children is more or less specific to the public utilities corporations
where conditions of employment emulate to a certain extent those in the civil service. The utilities and transport service sectors are generally more generous than
the low-paying manufacturing industries in providing their employees with holidays and welfare facilities such as sick leave, a provident fund, gratuities and medical treatment.9
The longitudinal movements of these differentials have not yielded any conclusive trend over time, or at least have given rise to conflicting interpretations by different writers. For instance, Chau claimed "ample evidence of a narrowing of wage gaps between different occupations, and between levels of skills within an industry or an occupation". 10 Within the manufacturing sector, he found that average daily wages went up by 137 per cent for the unskilled and 161 per cent for the semi-skilled, but only 65 per cent for the skilled over the period 1961-71. The narrowing wage differentials between the skilled and unskilled were said to persist, so that between 1971 and 1977 the growth was lll per cent for the unskilled and 97 per cent for the skilled. England and Rear were in broad agreement when they observed that the rapid industrial growth and "the high demand for labour, particularly semi-skilled labour, in the years since 1961 has reversed the previous trend of widening differentials".1 1 Specifically, over the period 1961-78, semi-skilled workers experienced the greatest increase in wages and skilled workers the least.
Almost opposite views on pay level movements over the comparable period were reached by Turner et al., who contended that "skill differentials appear, unlike those between industries, to have been widening". Their calculations showed, contrary to Cbau's, that between 1971 and 1977 the average daily wage rate for skilled workers rose by 82 per cent, compared with 73 per cent for labourers and semi-skilled workers. 12
III.3 Minimum wages
Hong Kong first legislated on minmum wages as early as 1932. The Minimum Wage Ordinance of that time enabled the Governor in Council to declare a minimum wage for any occupation in which the wages were considered to be unreasonably low. Any inquiry leading to such a promulgation was to be conducted by a board of commissioners appointed by the Governor.
This minimum wage law was found to be "merely a legislative gesture" and was superseded by the Trade Boards
Ordinance in 1940 upon the recommendation of the Labour Officer (equivalent to the Commissioner for Labour today) in his 1939 report. This Ordinance makes it possible for a system of trade boards to be set up on a sectoral basis, according to needs as they become apparent. Composed of representatives in equal numbers of workers and employers from the trade concerned, these trade boards are to "have the power and duty of fixing minimum wages, determining normal working hours, and fixing overtime rates in trades where the wage standards are low and where organisations of employers and workers are ineffectual". Thus, Hong Kong has for a long time applied, by virtue either of the Minimum Wage Ordinance of 1932 or the Trade Boards Ordinance of 1940, the Minimum Wage-Fixing Machinery Convention, 1928 (No. 26). The 1940 enactment is still in
the statute book today but, like its predecessor, it has never been put to actual use. This is offiGially attributed to the absence of any popular demand or specific representation from members of "low-paid" occupations seeking the convening of the trade boards.
Up until now, there has been no provision for an economy-wide statutory minimum wage in Hong Kong. Its desirability has always been a polemical issue for public
debate on labour policy. Proponents of government intervention are critical of sweated labour conditions reportedly found in some of the marginal traditional trades, especially among the older workers, so that a state-determined wage floor is seen as an appropriate lever to help ensure an acceptable basic living standard for working people. They also point to the issue of low pay which indirectly subsidises inefficient employers and permits them to survive; it would be consistent with the public concern for economic flexibility, they contend, to introduce to the wage structure a "minimum which would be high enough to compel less efficient employers either to improve their productivity or to release labour to more efficient firms". 13 Still another supporting argument claims that "the structure of pay differentials has been partly determined by custom, history and random chance, and
is inegalitarian to a degree which is unwarrantable, if not sometimes irrational, economically" -so that a rising wage floor would entail a desirable "pressure towards the general reduction of unnecessary inequity".14
On the other hand, considerable reservations have also been made concerning the merits and practicability of introducing a general minimum wage. A common rejoinder
138
refers to the sustained trend of improving real wages as a result of the booming economy, so that the need for a minimum wage does not currently exist. Another argument cites the administrative complexities that may accompany its enforcement. There are other, perhaps stronger, arguments. For example, a m~n~mum wage could induce employers to restrict employment which is below their capacity, thereby indirectly creating more unemployment, especially for the marginal workers whom it was designed to protect. The m~n~mum rate, once promulgated by the Government, might be used by employers as the official wage rate, and cited against workers during demands for wage increases. Even trade unionists are afraid that the declaration of any statutory wage would perversely erect a ceiling to wage levels, as most employers are thought unlikely to concede anything voluntarily above the statutory minima. In the sphere of collective bargaining, it might create an even more passive labour force which could become dependent upon the Government, not only for labour standards but for wage standards as well. Moreover, it is feared that the image of Hong Kong as a neo-classical "permissive" economy might be impaired by the introduction of such institutional controls as a minimum wage. Its freedom from the rigidities of collective bargaining, aided by the Government's pledge not to impose by direct control on private wages, incomes and prices, is considered "to be the key to the adaptability of the economy -the so-called prerequisite of its survival".15
III.4 The wage determinationprocess
The relatively low level of institutionalisation of the wage determination process, as evident in the sparsity of collective bargaining and the absence of an economy-wide statutory minimum wage, stems from the general docility of the trade unions and from the so-called "free and competitive" economy of Hong Kong. It has often been suggested that wages here are determined freely by supply and demand in a relatively open labour market that approximates to the ideal market of the "classical" economists. (See Appendix A for a brief account of the wage negotiation process in Hong Kong.) Such structural openness is attributed to the ready availability of information about wages and vacancies, the communication of which within the community is facilitated by the high density of industrial establishments and the congested residential and industrial accommodation in Hong Kong. The availability and extensive
use by the workers of conununication media such as the telephone and the popularity among employers of television, newspapers and wall posters for recruitment, also help disseminate job information to a wide cross-section of the working population in Hong Kong. Furthermore, because of the compactness and small size of Hong Kong and the absence of institutional barriers to entry erected by trade unions, there are relatively few restrictions on workers' job mobility between industries, occupations and trades in search of better wage deals.
However, on closer examination, there are also discernible elements of imperfection in the labour market. Firstly, there are still some traditional sectors where recruitment follows well-established customs and practices and, as such, is relatively closed. Secondly, despite the small &ize of Hong Kong, geographical barriers to mobility do exist. This is especially true in some parts of the New Territories and outlying islands. Transportation costs, which have increased substantially in recent years, and traffic congestion make conunuting long distances to work undesirable in terms of both time and expense. The scarcity of housing also discourages job movements which might entail residential changes as well. Thirdly, some employers in Hong Kong have developed certain employment practices which tend to conunit their employees to long-term attachment to their companies. These include the provision of extensive fringe benefits like pensions tied to length of service, incremental pay scales, internal promotion and company-specific training. These practices create, within large organisations, "internal labour markets" which tend to be under the control of management rather than responding to the forces of supply and demand in the open external labour markert. 16
IV. REGULATION OF OCCUPATIONAL SAFETY AND HEALTH
In Hong Kong, provisions for safety at the workplace and the prevention of occupational injuries, accidents and other hazards have been largely a statutory and administrative function of the Government, although a voluntary safety movement is now emerging under official sponsorship in the private sector. Since 1978, an Industrial Safety and Accident Prevention Committee has been appointed under the Labour Advisory Board to foster public consciousness of occupational hazards, especially at the shop-floor level, with a view to the possible establishment of an Occupational Safety Council. An umbrella of tripartite industrial subcommittees is presently being conceived to cater to the specific needs of individual sectors. "The Shipbuilding and Ship-repairing Industry Safety Subcommittee and the Plastics Industry Safety Subcommittee were formed in May 1982. These became the third and fourth of such subcommittees, following those for the construction and textile industries formed in 1980 and 1981 respectively."17 At present, five such subcommittees have come into existence, with the fifth created in 1984 for the metalware industry. These tripartite bodies discuss safety problems and engage in the promotion of safety awareness at the level of their respective industries.
IV.l Occupational safety
There exists a fairly elaborate statutory code governing industrial safety, as prescribed under the Factories and Industrial Undertakings Ordinance and its subsidiary body of Regulations, vis-a-vis a relatively unregulated non-industrial sector. Mandatory safety standards applicable to every registrable workplace include the requirement to fence securely to a height (in normal circumstances) of at least 3 feet, all platforms, pits and openings in floors and every other place liable to be dangerous to persons; and all vessels containing any scalding, corrosive or poisonous liquid. Women and young persons are prohibited by the Factories and Industrial Undertakings Regulations from cleaning any dangerous part of the machinery while the machinery is in motion, or any mill-gearing that serves to propel the machinery. Moreover, it is compulsory under the Guarding and Operation of Machinery Regulations of the Factories and Industrial Undertakings Ordinance for the proprietors of factories to equip dangerous parts of every piece of power-driven machinery or plant with effective guards substantially erected and to maintain such guards in efficient condition and to keep them in their proper positions while the machinery or plant is in motion. It is also necessary to fit any machinery or plant with an efficient starting and stopping device, which should be readily and conveniently controlled. Apart from these legal obligations incumbent upon the employer or proprietor of the workplace, the employee also has a duty at law to make full and proper use of any guard or device, and to report any faults or defects to the proprietor. These duties, if not fulfilled, will give rise to an offence actionable on either the employer or the employee.
The Factories and Industrial Undertakings Regulations also deal with the problem of fire hazards by requiring in every registrable workplace the provision of fire-resisting doors which should be kept unlocked, and adequate and properly marked fire escapes and fire-fighting appliances which must be maintained in good condition, free from damage, obstruction or impairment. In addition, it is necessary to isolate satisfactorily any dangerous goods store from any workplace inside the same building by a proper fire-resisting structure. The Commissioner for Labour is also empowered to ban smoking or the use of naked lights in workplaces which he considers vulnerable to the outbreak of fire.
Besides the above Regulations, which apply generally to all workplaces irrespective of type, the Factories and Industrial Undertakings Ordinance has also introduced a series of subsidiary safety regulations for different trades and industries.
IV.2 Occupational health and hygiene
Under the Factories and Industrial Undertakings Regulations, cleanliness at work is essential and every registrable workplace must be maintained in a clean state free from effluvia ar1s1ng from any drain, sanitary convenience or nuisance. Adequate ventilation of workrooms or mining shafts must be secured and maintained by the circulation of fresh air. Where dust or fumes liable to be injurious or offensive to the employees are emitted, all possible measures must be adopted for protecting the employees against inhaling such dust or fumes and, where practicable, localised exhaust ventilation must be provided and maintained.
The Factories and Industrial Undertakings Regulations also require that every workplace be provided with sufficient and suitable lighting, whether natural or artificial. For this purpose, all glazed windows and skylights in the workplace shall be kept clear and free from obstruction. Adequate drainage must be maintained, in addition, for any workplace where any process or work is carried on which renders the floor liable to be wet. It is also necessary to maintain the surface of all the floors of the workplace and keep the floor, goods and materials free from any obstructions or hazards which may cause injury to the employees. The workplace should be provided with sufficient and suitable latrines and washing facilities on the premises and, where persons of different sexes are employed, separate facilities are to be made available. Furthermore, the employer is obliged to ensure that an adequate supply of drinking water from either a public main or a source approved in writing by a health officer is conveniently accessible at suitable points to all employees.
To prevent congestion at work, any registrable workplace should not be so overcrowded as to cause risk of injury to the health of the employees and each workroom must provide for at least 250 cubic feet of space for the employees, with a notice specifying the number of persons employed.
Apart from the factory inspectorate, other official agencies in the Labour Department concerned with occupational health and hygiene are the Occupational Health Division and the Air Pollution Control Division. The former, comprising the Occupational Medicine Unit and the Occupational Hygiene Unit, provides an advisory service to the Government and industry on matters concerning the health of workers and the hygiene of the workplace. Given its supervisory role in monitoring occupational health standards and practice, staff of this Division pay frequent visits to those factories susceptible to special occupational health problems, as well as offering professional advice to both employers and employees on the prevention of health hazards at work. This agency is also responsible for supervising and advising on the medical and health aspects of special activities such as underground work, compressed air, diving, chrome plating, dry battery manufacture, rubber industry, and so on. The Occupational Hygiene Unit of this Division, primarily concerned with the promotion of a healthy working environment, is engaged in such tasks as factory visits, environmental and biological monitoring, laboratory analysis of samples, evaluation of industrial hazards and setting standards for their control, and the conduct of investigations into complaints concerning the work environment and industrial mishaps involving chemicals, gases and solvents.
The Air Pollution Control Division, which administers the Air Pollution Control Ordinance and its subsidiary legislation, is responsible for the control of air pollutant emissions from stationary sources such as furnaces, ovens, chimneys, engines and other industrial plants. It investigates air pollution complaints and advises industry
on matters relating to air pollution control, as well as preparing proposals on the declaration of air control zones, and so on.
IV.3 Occupational accidents
A minimum standard required under the Factories and Industrial Undertakings Regulations is that the proprietor of any workplace shall provide first-aid boxes (or cupboards) containing a specified list of first-aid requisites, at a ratio of 1 for every 100 employees in the workplace. Under these Regulations a duty is also imposed upon the employer or proprietor of the works to report to the Government on any industrial accidents or dangerous occurrences. Where an accident in an industrial enterprise results in either death or serious bodily injury, these Regulations require that a report of the accident shall be made orally or in writing by the proprietor within 24 hours to a factory inspector or the Superintendent of Mines of the Labour Department, and also to the police station nearest to the place of accident where the accident is fatal. In any event, a written report of any such accident is required from the employer within seven days, specifying the particulars of the victim and his employer, the date and details of the accident and the nature of the injury. Even where no personal injury has resulted, the proprietor of the workplace is also obliged to report to the Labour Department every dangerous occurrence.
IV.4 Duties of employees
Under the Factories and Industrial Undertakings Regulations, employees in an industrial workplace are forbidden wilfully to interfere with or misuse any means, appliance, convenience or other device provided under the law for securing the health, safety or welfare of the persons employed in the workplace or to refrain from using such appliance or means where provided for the purpose of securing health or safety. Failure in this duty is liable to constitute a punishable offence.
IV.S Implications for industrial relations
In Hong Kong, the ramifications of occupational safety for industrial relations have been consciously.propagated by the Government, as suggested by the Code of Labour Relations Practice, published by the Labour Department. However, it appears that awareness of the problem in the private sector is far more limited, among employers and employees alike. Voluntary efforts to enhance industrial safety and reduce occupational hazards, whether collective or individual, are relatively rare in the average workplace in Hong Kong, and the level of involvement by trade unions with regard to the safety aspects of industrial relations has been low key. Occupational safety is probably absent from the agenda of most union programmes, and in many cases union officials appear more concerned with the compensatory, rather than the preventive, aspects of occupational accidents.
In this context, both sides of employment have been
heavily dependent upon the official external agencies of the Government for the regulation of industrial safety. In order to be effective, enforcement has become somewhat punitive, backed by penal sanctions. However, a coercive and externalised approach is clearly inadequate for an issue of this nature if the immediate parties concerned, employers and employees alike, fail to take appropriate and sufficient precautions. As a long-term measure to overcome this lack of public responsibility, the Government's present attempt to sponsor and monitor a voluntary safety movement among workers and employers in Hong Kong mentioned earlier may provide an ultimate and effective answer.
V. LABOUR MOBILITY AND JOB SECURITY
V.l Labour mobility
The almost sustained shortage of labour and skills during the past decade has given rise to a popular impression of "the typical Hong Kong wage earner as a highly mobile and informed exploiter of multiple labour market opportunities". 18 However, such a picture of labour instability and its implication that the worker could readily protect his market interests by simply "voting with his feet" in a high-employment economy was found to be mythical by Turner et al. Evidence was cited in official statistics: the Labour Force Survey conducted by the Census and Statistics Department in September 1978 revealed that only 4.4 per cent of workers employed had changed their jobs within the previous six months, hence suggesting an average annual mobility of the labour force that could not exceed 10 per cent even at a time of labour scarcity. In corroboration, the researchers claimed that:
In our �E �E �E sample survey of employees as a whole only 26 per cent had worked for their present employer for less than a year, and over half had been with him for more than three years. Interviews with individual firms revealed several cases, even in industry, where labour turnover was below 5 per cent a year. 19
There are admittedly a number of occupations and industries prone to labour turnover. "For young women with slightly more than minimal education, and for presentable young men, retail trade provides a rather similar area of high mobility. Construction, wholesaling, seafaring, catering and other sectors employing men in casual unskilled and semi-skilled manual work are also vulnerable to rapid turnover, particularly since mobility between trades (as well as between firms) is often relatively easy, in the absence of union controls over entry".20 Most problematic among the major economic sectors, above all, is manufacturing where the semi-skilled, young and predominantly female operatives typically lack a long-term career commitment, either to their organisation, industry or occupation. These workers "are liable to seek the short-term rewards of dead-end jobs in 'fly-by-night' industries which have no guaranteed future".21 Added to this are the competitive wage strategies often pursued by industries in a state of boom (like electronics, garments, plastics, etc.) that encourage these non-committed workers to change jobs frequently in the hope of gaining marginal wage increments.
Outside these trades, the lack of or limitation on employee mobility has contributed to the segmentation of the labour market. According to Turner et al., Hong Kong employment is divided into two segments: one of security and relatively assured personal progress, the other of insecurity and uncertainty. Within this dual labour economy, those disadvantaged or non-competitive groups in the "secondary sector" often comprise older men with a refugee background who have experienced a considerable drop in social and economic status and who thus develop a special concern for stability and security, or recently arrived immigrants from China who "are obliged to concentrate on the Kowloon side for want of main island living space, and form a pool of labour with limited knowledge of local pay and job opportunities", and who presumably lack work skills.2 2 The vulnerability of these marginal workers highlights the issue of job security and its protection, to be discussed in the next section.
The preceding conclusions were re-confirmed by Turner and his associates in their recent investigation of the Hong Kong labour market in the context of their follow-up study, after about a ten-year interval since their first inquiry of the mid-1970s. He notes the continuous presence of the "peripheral" mass:
So the mass of Hong Kong employees -the million-and-a-half workers in the newer manufacturing industries, construction and commerce, for instance -are reached only to a limited degree by the Labour Department's services (although the Department provides what is virtually their nearest equivalent to trade union protection), and hardly at all by the established trade unions. They are, in a sense, unknown. 23
in contrast to the aristocratic "core" groups:
in certain now well-established centres of union organisation -the older manufacturing industries and craft, marine transport and much of the domestic transport system, some public utilities and private services, the civil service generally -a reasonably acceptable system of internal industrial relations has developed. 24
V.2 Job security
V.2.1 Job security in general
There have been signs of growing concern and greater aspirations among Hong Kong workers concerning the provision of higher job security. The introduction of severance pay legislation under the Employment Ordinance in 1974 was one major positive step by the Government to provide a measure of insurance or protection to employees whose employment was affected by redundancies or lay-offs. Nevertheless, it is still generally considered that the employer possesses the absolute prerogative of dismissal, provided that he respects the appropriate term of notice or payment in lieu. The employer is not obliged at law to justify the dismissal since there is no provision for redress or sanction as defined by any concept of "unfair dismissal". Neither can obligatory reinstatement be awarded by the Labour Tribunal as a remedy for the dismissed employee.
In the event of amalgamations, mergers, take-overs, sales, transfers or change-overs in ownership of
enterprises, there is no automatic transfer of the individual employment relationship to the new employer. Although there is a general presumption that an employment contract applies by its intent only to the original parties, a transfer of the employment relationship can be effected, together with the liabilities and obligations formerly incumbent on the former employer, if the new employer (that is, the acquirer, for example) offers to re-engage the employee under conditions not worse than those under the previous engagement, and the employee continues to retain and enjoy his full seniority. None the less, it is not mandatory upon the acquirer to take over the existing employees. Should he decide not to inherit the onus, these employees will then have to be dismissed by their former employer (that is, the transferer or relinquisher of the enterprise) with the appropriate term of notice or payment in lieu, plus the full amount of severance pay payable to the individual employee in accordance with his length of service.
V.2.2 Redundancy and severance pay
The Employment Ordinance since 1974 has introduced the statutory right of the employee to severance payments under specified conditions relating to redundancy, lay-off or change of ownership. These severance payments are made upon redundancy dismissals by either collective or individual termination of the relevant labour contracts.
Dismissal by reason of redundancy as defined under the law pertains to dismissal when -
(a)
the employer has ceased, or intends to cease, to carry on his business; or
(b)
there is a reduction in demand for the employee's particular kind of work; or
(c)
the employer has moved or intends to move his business premises from one side of the harbour to the other -that is, from Hong Kong Island to Kowloon or the New Territories, or vice versa.
rhe legislation provides a liberal definition of dismissal )y reason of redundancy, with the qualification that any :lismissal will be presumed to be dismissal by reason of
redundancy unless the contrary is proved by the employer.Termination of a contract of employment ar1s1ng from prolonged lay-off, in addition, also entitles the employees to severance pay. Such situations occur when the employerfails to supply employees with work on a total of at least 12 normal working days in any period of four consecutive weeks, provided they do not receive any remuneration for such period.
There are, nevertheless, specified categories of employees who are excluded from the purview of severance payment legislation. They include:
(a)
non-manual workers whose wages exceed HK$9,500 a month;
(b)
the husband or wife of the employer and members of the employers's family who are employed in his business and live in his house;
(c)
any outworker;
(d)
employees who work outside Hong Kong as manual workers, covered by the Contracts of Overseas Employment Ordinance;
(e)
merchant seamen serving under ship's articles whose employment is protected by the Merchant Shipping Ordinance;
(f)
apprentices serving under apprenticeship agreements attested by or registered with the Commissioner for Labour after 1 April 1965;
(g)
any person who is eligible for a pension, gratuity or annual allowance under the Pensions Ordinance. These are essentially civil service employees;
(h)
any person employed by a government other than the Hong Kong Government who is a subject or citizen of the State under whose government he is employed.
To be eligible for severance pay, the employee has to be employed under a continuous contract of not less than 24 months immediately preceding dismissal by reason of redundancy or lay-off. For every year of service, a monthly rated employee is entitled to two-thirds of his last full month's wages, while a time-rated (which may include hourly, daily or weekly rated) or piece-rated employee is entitled
to 18 days' wages based on any 18 full working days chosen by the employee from his last month of employment. But if the employee so elects, the base of computation can be determined by averaging wages over the latest period of 12 months. For any incomplete year of service, the calculation of severance pay for that period will be prorated in terms of a year's complete service.
The severance payment accruing to the employee is above all subject to two ceilings:
(i)
in terms of the money claimable, the total amount of wages the employee earned during the period of 12 months immediately preceding redundancy;
(ii)
in terms of the time period tenable, up to eight years' service for claiming severance pay prior to 23 August 1974, when such provisions were first enacted.
V.2.3 Business failures and insolvency
The financial collapse and business failure of an enterprise leads to the dissolution of the individual contract of employment in a situation which is often common to all its employees. Structurally speaking, in spite of the latitude of variations, business in Hong Kong can be conducted in the form of either:
(i)
a limited liability company; or
(ii)
a sole proprietorship or (unlimited) partnership.
Correspondingly, in a situation of insolvency or financial breakdown, these two types of trading entities are governed by different statutes in Hong Kong -the former by the Companies Ordinance, 1933, and the latter by the Bankruptcy Ordinance, 1932. Under the Companies Ordinance, the limited liability company is regarded as a corporate entity and only its assets are available for liquidation to pay off the creditors. As a corollary, its shareholders and directors are not personally liable for payment of the debts of the company except in the event of fraud or wrong-doing committed by any individual staff. In an event such as insolvency, any creditors or any contributory (who is a person liable to contribute to the assets of a company in the event of its being wound up), including employees who are owed wages, can petition the High Court of Hong Kong for a winding-up order so that the Official Receiver may be appointed to realise the assets of the company for payment of its debts. On the other hand, if an employer of the second category (i.e. a sole proprietorship or partnership) becomes insolvent, any creditor may petition under the Bankruptcy Ordinance to the High Court of Hong Kong for a rece~v~ng order so that the Official Receiver can be appointed over the estates and assets of the employer himself. This action has the effect of depriving the indebted employer of possession and control over his own property so that it can be preserved for distribution among the creditors.
The Companies Ordinance places specified categories of the employees' claims on parity with statutory Crown debts, and in preference to most other debts owed by the compa,ny under a winding-up order to other creditors. These include:
(a)
wages or salary (including ascertainable commission that may be due) up to a maximum of HK$8,000 per employee in respect of services rendered to the employer during the four months immediately preceding the date of either the issue of a winding-up order by the Court, or the appointment of the Official Receiver as provisional liquidator of the company;
(b)
wages in lieu of notice not exceeding one month's wages or HK$2,000, whichever is the lesser in respect of each employee;
(c)
severance pay not exceeding HK$8,000 in respect of each employee;
(d)
employees' compensation.
In the event of bankruptcy of a sole proprietorship or a non-limited liability firm, similar qualifications and treatment in terms of priority status under the Bankruptcy Ordinance apply to the employees' claims for debts due. Employees are entitled to preferential payment of wages in lieu of notice; severance pay; employees' compensation; and wages and salaries (so long as these latter amounts were owed in respect of services rendered to the bankrupt employer during the four months immediately preceding the date of the appointment of the Official Receiver as interim receiver, or the date of the receiving order made by the court, whichever is the sooner).
By implication, it is understood that any employees' claims falling outside the categories and exceeding the levels defined above are not accorded any legal precedence over the other debts owed by the insolvent employer. As claimants for non-preferential debts, the employees stand only as ordinary creditors ranking equally with the other creditors of the employer.
After the court has made the winding-up order under the Companies Ordinance or, alternatively, the rece~v~ng order under the Bankruptcy Ordinance, the Official Receiver will call a meeting of all creditors, including the former employees to whom wages are due. Before the meeting, these creditors have to submit the respective proof of debt to the Official Receiver who will verify and adjudge the claim. In the meeting the creditors will decide on such questions as the appointment of a trustee or liquidator to administer the insolvent estate.
V.2.4 Wage security and the Protection of Wages on Insolvency Fund
Emulating the Trucks Act in the United Kingdom, the Employment Ordinance enacted in Hong Kong in 1968 seeks, among other things, to protect wages payable for work done. It lays down the statutory obligations of employers to discharge wage payments promptly and in accordance with the wage period, to dissolve the employment relationship where they lose the ability to pay wages, and not to deduct wages for reasons other than those specified in the stringent conditions laid down by law. In addition, the Ordinance imposes a liability in the building and construction industry upon the principal contractor to pay wages on behalf of subcontractors in the event of the latter's default in effecting payment.
Such protective measures covering wage security are further extended under the recent establishment of a statutory centrally administered fund to provide contingencies for business insolvency.
The surge of business failures in the early 1980s, when Hong Kong was caught in the world-wide economic recession, prompted the Hong Kong Government to investigate the desirability of creating such a fund to cover wages owed to workers by employers who become insolvent. An officially appointed Working Group on Problems Experienced
by Workers of Companies in Receivership was subsequently convened, leading to its recommendation of the creation of the Protection of Wages on Insolvency Fund. The proposal was implemented, with the inception of the Fund in April 1985, under the newly enacted Protection of Wages on Insolvency Ordinance. At the same time, the Business Registration Ordinance was amended to provide for the imposition of an annual levy on companies required to hold business registration certificates as a source of finance for the operation of the Fund.
The 1985 legislation thus enables the Fund "to pay arrears of wages to employees up to the preferential limit under the Companies and Bankruptcy Ordinances", if employers lose their ability to pay wages due as a result of insolvency or business failures. Such a payment, of an ex gratia nature, may be authorised by the Commissioner for Labour, subject to the Board's power to review his decision upon appeal. Official actions can be initiated either upon the submission of an application from the workers affected (provided that a bankruptcy petition or a winding-up petition has been presented against the employer) or directly by the Commissioner for Labour at his discretion, in the case of a small business employing less than 20 workers, provided that he is satisfied that -
(a)
if the employer is a company, he is unable to pay his debts; or
(b)
if the employer is a person other than a comany, he has committed an act of bankruptcy.
In essence, the Insolvency Fund, administered by the Labour Department under the Board's superv1s1on, provides employees in Hong Kong with a measure o{ security against employers' defaults in payment. It enables them to recover their accrued wages while saving them having to go through the often extended and tedious legal process of liquidation for (often partial) debt clearance -which could also cause hardship to the workers because of the long waiting period for court proceedings. Nevertheless, the amount available to each worker in every claim under the Fund's cushion is subject to a maximum of HK$8,000, which must cover all remuneration and earnings, statutory holiday pay, annual leave pay, end-of-year payment, maternity pay and sickness allowances.
V.2.5 Long service payment
Another recent piece of legislation that makes a substantial contribution to the gradual erection of a statutory floor of employment security and benefits is the introduction under the Employment Ordinance of the employer's obligation to effect a "long service payment". The enactment, brought into effect on 1 January 1986 by virtue of the Employment (Amendment) Ordinance 1985, obliges the employer to pay to the discharged employee a long service gratuity, provided that the latter is not dismissed either summarily or by reason of redundancy, in which instance severance pay would be payable. The scale of such a payment is determined principally by two criteria, age and seniority (i.e. length of service), as prescribed by the following formula:
(i)
The amount of a long service payment to which an employee aged not less than 40 years at the relevant date is entitled shall be calculated by allowing -
(a)
in the case of a monthly rated employee, two-thirds of his last full month's wages; and
(b)
in any other case, 18 days' wages based on any 18 days chosen by the employee and occurring in the period of his last 30 normal working days, for every year of employment under a continuous contract by his employer;
(ii)
in the case of an employee aged at the relevant date 36 years or more but less than 40 years, 75 per cent of the long service payment to which he would have been entitled under (i);
(iii) in the case of an employee aged at the relevant date less than 36 years, 50 per cent of the long service payment to which he would have been entitled under (i).
Such entitlements, however, are subject to the ceiling of "a maximum payment not exceeding the total amount equivalent to 12 months' wage earnings" and the following qualifying criterion that combines both the age and seniority attributes: Age Number of years of service
Less than 41 years old 10
41 years old 9
42 years old 8
43 years old 7
44 years old 6
Not less than 45 years old 5
Nevertheless, the newly conceived legislation, in spite of the improved security it entails for older employees with longer service, has been viewed in certain vocal sectors of the labour movement (notably, the non-1-mion labour organisations spearheaded by the church-sponsored Christian Industrial Committee) with scepticism or even apprehension. It is feared that such a provision might pre-empt a future central provident fund or social security scheme by an arrangement which perpetuates the conservative principle of restricting private liabilities (at employment) to the individual employer and which, through the complexity of the governing formula, discriminates against younger workers.
Notes
1 Commissioner of Labour, Annual departmental report for the financial year ended 31 March 1951, Hong Kong, 1951, para. 53, p. 17.
2 Edward Szczepanik, The economic growth of Hong Kong, Hong Kong: Oxford University Press, 1958.
3 See, for instance, England's critique of working conditions in the early 1970s. Joe England, "Industrial relations in Hong Kong", in Keith Hopkins (ed.), Hong Kong: The industrial colony, Hong Kong: Oxford University Press, 1971, pp. 220-222.
4
H.A. Turner et al., The last colony: But whose?, Cambridge: Cambridge University Press, 1980, pp. 62-63.
5
ibid.
6 According to the 1973 Census of Industrial Production, the "profit content" of output for manufacturing was 11 per cent, compared to 27 per cent for mining and quarrying and 33 per cent for electricity and gas. Fung also reports recently that the relative productivity (ratio of output share to employment share in the economy as a whole) of the manufacturing industry
(0.63) is appreciably lower than that of finance (6.33) (speech presented by the Assistant Director, Hong Kong General Chamber of Commerce, to the 7th Liaison Meeting of the Japan Institute of Labour, 26 October-3 November 1982, entitled "Industrial relations -the Hong Kong scene"). On other clues to manufacturing as a low pay sector relative to others, see Turner et al., op. cit., p. 70.
7 Ronald Hsia and Laurence Chau, Industrialisation, employment and income distribution, London: Croom Helm, 1978, p. 97.
8 Turner et al., op. cit., p. 78.
For a cross-section of these industrial diversities in employmnt conditions, see Commissioner for Labour, Annual departmental report 1981, Hong Kong: Government Printer, 1982, pp. 111-121.'
1 0 Laurence L.C. Chau, "The size and profile of poverty in Hong Kong", in Leung Chi-Keung et al. (eds.), ~H~o~n~g~K~o~n~g~=~~D~i~l~e~mm~a~s~o~f~g~r~o~w~t=h, Hong Kong: Centre of Asian Studies, 1980, p. 519.
11 Joe England and John Rear, Industrial relations and law in Hong Kong, Hong Kong: Oxford University Press, 1981, p. 176.
I 2 Turner et al., op. cit., p. 79, especially note (14).
I 3 ibid.' p. 165.
14 ibid., p. 166.
15 Ng Sek-hong, "The formulation of labour policy in Hong Kong", in Hong Kong Law Journal, Vol. 13, No. 2, 1983, p. 176.
16 idem., "Wage negotiation practices in Hong Kong", in Performance, Vol. 1, No. 1, 1983.
I 7 Labour Department, Brief on general labour matters -Hong Kong, Feb. 1983, para. 65, p. 18. I 8 Turner et al., op. cit., p. 43. I 9 ibid.' p. 44. 20 ibid.' P�P 43. 2 I ibid.' p. 43. 22 ibid.' p. 53. 23 H.A. Turner, The prospect for trade unions in Hong Kong. Concluding address to the Conference on Trade Unions and Labour Organisations in Hong Kong, 4-6 September 1985, Hong Kong, Centre of Asian Studies, University of Hong Kong, p. 11. 24 ibid.
CHAPTER VII
WOMEN AND YOUNG WORKERS, SUBCONTRACT LABOUR AND HOMEWORKERS, AND "SOCIAL WAGES"
I. INTRODUCTION
This chapter discusses the working conditions of women and young workers as well as of subcontract labour, and raises the issue of whether or not existing social and legal provisions are adequate to protect them in view of their vulnerability in employment. This in turn highlights the system of social services administration in Hong Kong, and the extent to which the Government has assumed the role of supplier of essential items of "social wages" (including housing, and educational, medical and other welfare services, either free or state subsidised) to supplement the wages of the employees outside the workplace.
II. WOMEN AND YOUNG WORKERS
II.l Introduction
Protective legislation for female and juvenile labour has been confined largely to the industrial sector, as prescribed under two main sets of statutory regulations.1 The first is the Women and Young Persons (Industry) Regulations of 1980, introduced under the Employment Ordinance to absorb the former and comparable provisions under the Factories and Industrial Undertakings Ordinance. They regulate the normal working hours of young persons and women in industry, the amount of overtime work permitted, and rest pauses, lunch breaks and (weekly) rest days, as well as generally prohibiting their night work. The other statutory code is the Factories and Industrial Undertakings Ordinance and its subsidiary regulations -the effects of which are to prevent the hiring of women and
157
young workers in designated kinds of dangerous trades and industrial work (e.g. underground work, quarrying, mining and cleaning dangerous parts of a moving machine), on the grounds of occupational safety and health.
II.2 Past pattern and historical development
This protective framework can be traced back to the 1920s, when the Industrial Employment of Children Ordinance was first introduced in 1922 following the report of a 1921 Commission of Inquiry into the conditions of the industrial employment of children in Hong Kong, and the desirability and feasibility of legislation for the regulation of such employment. Official concern for such vulnerable categories of employees was inspired largely by the contemporary international movement in labour and social reforms, highlighted by the Washington inaugural conference of the ILO in 1919. The "stimulated interest in the colonies" of the British Empire by its Colonial Office was also a key factor behind the 1922 legislation, heralded by the Government as "the beginning of a proper recognition of the rights of both women and children in the industrial life of the colony".2 It proscribed the industrial employment of children from 7 p.m. to 7 a.m. Under its amendments of 1929, a similar ban on night work, between 10 p.m. and 6 a.m., was extended to women and young persons in industry. Furthermore, these three categories of employees were prevented from entering employment in defined dangerous trades, although the Protector of Labour (an office which was then held concurrently by the Secretary for Chi--�P -Affairs) was empowered to authorise special permissio,_ _or women to work under exceptional circumstances. The principle of a nine-hour day, mandatory rest breaks and weekly rest days was also proclaimed.3
In 1932, the Factories and Workshops Ordinance was enacted, incorporating the above body of regulations, with the additional prov1s1ons of (i) a complete ban on the industrial employment of children younger than 12 years; and (ii) extension of the proscribed hours for women and young workers in industry to between 9 p.m. and 7 a.m. This Ordinance was amended subsequently in 1936 and 1937. By virtue of the 1937 amendment, the Chairman of the Urban Council was made the "Protector of Labour" in place of the Secretary for Chinese Affairs. At the same time, the m1mmum age permitted for industrial employmnt was raised from 12 to 14; the prohibited hours for women and young
persons in industrial work were extended to between 8 p.m. and 7 a.m. Besides, a ban was placed on female work underground in all mines.
As a result of these enactments and their gradual improvements, it may be said that a basic legal framework designed to protect women and young workers had already crystallised before the Second World War. International labour Conventions served to provide a crucial benchmark for the formulation of these protective standards, as noted in a 1939 report by the Labour Officer:
These by-laws give effect to the provisions of certain Conventions of the International Labour Office such as Convention No. 4 concerning the employment of women during the night; Convention No. 5 fixing the minimum age for admission of children to industrial employment; Convention No. 6 concerning the night work of young persons employed in industry; Convention No. 41 concerning the employment of women during the night; and Convention No. 45 concerning the employment of women on underground work in mines of all kinds.4
During the late 1940s, following the Second World War, statutory control over the night work of women was slackened slightly to make allowance for both production flexibility required by economic rehabilitation and the preference for longer hours in exchange for extra money by the wives and children of poor families. Nevertheless, towards the end of the 1950s, about a decade after Hong Kong started to industrialise, there was renewed pressure on the labour administration to enhance the protection of women and young workers in industry. The British "home lobby" (which also reflected the anxiety of the British textile industry to protect declining clothing centres like Lancashire against the challenge of growing Hong Kong textile exports) set in motion in 1958 a major piece of legislation which improved upon the existing law.
The Factories and Industrial Undertakings Regulations, thus revised, instead of remaining hitherto silent on the actual duration of industrial work permissible for women and young persons,5 specified the maximum to be ten hours a day and 60 hours a week. It was also expressly provided that "no proprietor of an industrial undertaking may employ any woman or young person on more than six days in any week".6 Furthermore, the complementary notion of legally permissible "overtime work" was introduced.7 By virtue of a Legislative
Council resolution in 1958, mandatory rest days at weekly intervals also came on to the statute book. It appears that the contemporary legal machinery which imposes protective limits on the labour contracts of women and young workers in industrial employment had begun to crystallise by 1958 with the reformulation of these provisions.
This body of protective restrictions that applied, inter alia, to female industrial employees was further strengthened in the aftermath of the 1967 civil disturbances. Statutory improvements to "safeguard the health and working conditions of the industrial population" ranked as a top priority on the Government's legislative agenda.8 The administration was intent on bringing the working conditions of women and young workers in industry more into line with prevailing norms of "internationally accepted standards". Such measures of "harmonisation" were considered imperative to remove the stigma attached to Hong Kong as a haven for cheap labour -which not only captured the attention of the British trade union movement and of the ILO but also posed a formidable stumbling-block to Hong Kong's trade negotiations with the European Economic Community (EEC). 9
In 1967, the Legislative Council approved a scheme whereby the maximum standard hours of women and young persons in industry were to be reduced by phases. This stepped programme had the effect of lowering the standard hours from ten hours a day and 60 hours a week to eight hours a day and 48 hours a week by December 1971 -the international norms promulgated by the Hours of Work (Industry) Convention, 1919 (No. 1). A margin of flexibility was at the same time allowed, when the aggregate overtime permissible for these workers was raised from 100 to 200 hours annually. 10 Since then, the statutory regulations regarding the working hours of women and young workers in industry have remained substantially unchanged.
II.3 Present conditions and legal constraints
The relevant provisions were removed from the purview of the Factories and Industrial Undertakings Ordinance in July 1980 and have since been transferred to the jurisdiction of the Employment Ordinance, codified as the Women and Young Persons (Industry) Regulations, 1980. This "statutory transplant" is essentially a technical measure designed to clarify the boundary between the Factories and Industrial Undertakings Ordinance and the Employment Ordinance, so that the former now specialises in the regulation of safety standards at work, leaving all "rules of a social nature relating to employment" to be consolidated under the auspices of the Employment Ordinance.
At present, the Women and Young Persons (Industry) Regulations determine the standard working hours of women and young persons (aged between 15 and 17) in industry as eight hours a day and 48 hours a week. It is mandatory for them to be given one rest day a week and it is not permissible for these rest days to be worked as overtime, unlike the case of ordinary employees. Neither can an initially assigned rest day be substituted by another one without the prior consent of the Commissioner for Labour. These female industrial workers and their young counterparts of 16 and 17 years of age must be allowed at least a half-hour break after continuous work of five hours, whereas for young persons aged 15 the rest pause may not be less than one hour.
The permissible period of industrial employment is restricted to the hours between 6 a.m. and 8 p.m. every day for adult women and between 7 a.m. and 7 p.m. for young persons. Their night work in industry is generally proscribed. However, exemptions to the prohibition may be sought from the Commissioner for Labour where women workers are engaged for shift work in industry at night, but subject to certain stringent conditions specified officially. In essence, these conditions require:
(
i) that the number of women workers employed on the night shift is not less than 50;
(ii)
that transport facilities are available for the workers to travel to and from work;
(iii) that the minimum age of these women eployees is 18, and that they have voluntarily agreed in writing to night work.
Up to the present, these special concessions have been extended chiefly to large cotton-spinning and weaving mills in the textiles industry.
A general ban on overtime work beyond the standard eight-hour day is imposed by the Women and Young Persons (Industry) Regulations on all young industrial workers
under the age of 18. The same Regulations limit the industrial employment of women on overtime to two hours a day and 200 hours a year, provided that the resulting number of working hours per day does not exceed the legal maximum of ten hours, subject to a ceiling of 12 for the daily period of employment (defined to include overtime, meal and rest breaks).
The dilemma that faces the labour administration regarding this type of restrictive legislation that purports to protect vulnerable categories such as women and young workers from excessive industrial drudgery pertains to the criticism that the "protected" are as a result denied the exercise of their right in choosing to work or otherwise. With the modernisation of the average workplace in most
industries, the statutory limitation on the capacity to work at one's free will is decreasingly seen as a privilege and increasingly as a concession to obtrusive legislation designed to ameliorate the onerous socio-economic conditions of half a century ago.
For instance, when restrictions on overtime work allowed for young persons employed in industry were further tightened in 1976 under the Factories and Industrial Undertakings Ordinance, op1n1on polls indicated contrary wishes among the young industrial workers themselves:
According to a survey conducted by the Federation of Hong Kong Industries, 97.6 per cent of the workers in the 16-17 age group consulted felt that overtime for them should not be abolished. Another independent industry-wide survey just completed by the Hong Kong Productivity Centre indicates that 46 per cent of this group voted for the right to work overtime, with 36 per cent being indifferent. Only 17 per cent agreed with the proposed legislation.11
The question of "equity" and "freedom of work" were raised again in the Legislative Council in 1980. The existing inventory of protective regulations was challenged, firstly, for its restrictive effect on individual efforts to work, impinging upon "women's own free will to choose to work at night". Secondly, in terms of intersectoral comparability, these rules were described as inequitable for "restricting night work for women workers in the manufacturing sector but not in the commercial sector, where conditions of work may not
necessarily be more tolerable". 12
163
II.4 Findings of the 1981 survey of female employees in industry
The growing controversy over the protective regulation of women's employment in industry prompted a large-scale investigation of these workers' attitudes on a territory-wide basis in 1981. The survey, conducted under the sponsorship of the Hong Kong Labour Department, aimed at ascertaining the extent to which the women perceived existing protective labour legislation "as able to benefit or, conversely, compromise their well-being".1 3 The data for this study were based essentially on structured interviews of 1,000 female employees in a representative sample designed to replicate the industrial distribution of the territory's female labour force in manufacturing. The survey covered a total of 203 manufacturing establishments from which the sample was subsequently drawn. 14
The survey revealed a generally favourable orientation on the part of these women factory workers towards existing protective labour legislation, which included the specific provisions of (i) a minimum meal break interval of 30 minutes; (ii) limits on overtime employment;
(iii) prohibition of work in dangerous trades; (iv) prohibition of work on rest days; and (v) prohibition of night work.
In the first instance, when asked for a general overall comment, 69.7 per cent of the respondents viewed these regulations in a favourable light, as they were reckoned to be "all or mostly beneficial". When the protective legislation was described in terms of individual items, the same extent of positive endorsement was discernible -if not in a more conspicuous way. Thus, the majority of the workers in the sample viewed the provisions as "beneficial" with relatively few taking the contrary viewpoint (table VII.l).
It is possible that the age, education and employment status of the respondents could have an influence upon attitudes towards protective legislation on women's industrial employment. For instance, intra-sample comparisons indicated that the view that limits on overtime were restrictive was most evident among married women workers, aged around 30, paid on a daily basis and better educated, with a secondary form 4-5 background. Similarly, a higher level of education seemed to be associated with the employees�E scepticism about the prohibition of work on
Table VII.l Views of female employees in industry concerning protective labour legislation
Legislative Percentage of sample considering the
provision provision
Bene-Restric-Indif-Don't Total ficial tive ferent know
Minimum 30-minute 87.7 3.6 5.2 3.4 100.0 meal break
Limits on overtime 73.7 10.8 7.3 8.3 100.0 employment
Prohibition of work 90.8 2.7 2.2 4.2 100.0 in dangerous trades
Prohibition of work 82.5 9.0 4.6 3.9 100.0 on rest days
Prohibition of 84.1 7.4 2.9 5.6 100.0 night work
Source: Hong Kong Labour Department, "Survey of female employees in industry", 1981.
rest days -an attitude which was also more perceptible among the monthly rated, unmarried and younger workers. The ban on night work, while generally supported by the respondents, was more likely to be seen as restrictive by young women who worked in large industrial plants like textile mills.
Corresponding variations in opinions were also found when the respondents appraised such protective labour legislation in overall terms. Support for these legislative measures in their entirety was most manifest among the older age groups, notably those aged 30-39 years or 50 and above. By contrast, the young (for example, those aged 18-19 years) and the better educated (secondary form 4-5 level) in the sample tended to be more discriminating in
their attitudes and viewed the present body of protective legislation as only partly beneficial to them.
It is therefore difficult to justify the abrogation of the protective legislation as it stands -either in total or in part on the evidence of this opinion survey. Instead, the existing regulations were as a whole well received by the respondents. Moreover, in spite of the varying degree of support they showed towards each of the individual provisions, there were hardly any visible signs calling for major changes on any specific items. At best, there were implicit clues to suggest that, as the female industrial labour force became younger and better educated, they were more inclined to favour the discretion to decide on the length of their overtime hours and to choose between taking their rest day or working for extra pay in lieu, without being subject to the stringency of external legislative constraints. Education seemed to enhance the individual's desire for the freedom to adjust her working profile according to her age, marital status and family's economic needs, as well as her interests and intrinsic satisfaction derived from work. 15 Continuous official control might thus be increasigly seen as arbitrary and unnecessarily obtrusive by a more articulate and educated female working population in the future.
III. HOMEWORKERS AND SUBCONTRACT LABOUR
Another special and (often considered) marginal category of workers are the homeworkers and subcontract labour in the manufacturing industry. Putting-out, homeworking and subcontracting arrangements have been an essential component of the industrial economy that facilitates its operation and continuation. Owen reported a sample survey of nearly 1,000 firms from 20 industries in 1969, showing 29 per cent using subcontractors. 16 The scale of home work is more difficult to estimate: the Hong Kong Population and Housing Census of 1971 put the number of "outworkers" at 4,560, out of an employed population of 1,456,612. This figure, however, appeared to be understated as it was inconsistent with the much larger estimates of recent years. Both the 1977 Labour Force Survey and the 1981 Census, for instance, indicated 2.4 per cent of the working population to be "outworkers" a manpower pool that exceeded 50,000 in absolute size.17 This phenomenon of "a form of dualism within the manufacturing sector The subcontracting links between firms are both extensive and convoluted", which is not uncommon in developing economies, is applicable to Hong Kong. 1 8 The "secondary" sector hence consists of "a visible continuum .�E. from small workshops, street stalls and family shops, members surely of the bazaar economy, through bigger but hardly domestic workshops or retailing arrangements, through retailers with a wholesaling side or workshops doing subcontract work for export manufacturers ..�E"19
Evidently, subcontracting relationships in the Hong Kong economy may take such a variety of forms that exhaustive enumeration of them is beyond the scope of the present discussion. Traditionally, labour subcontracting has been the predominant form of manpower recruitment in such, sectors as building and construction, stevedoring, shipbuilding and repair, and public utilities; typically, skilled labour is hired in gangs through the gang leader from the casual labour market. In the manufacturing sector, on the other hand, subcontracting generally takes place between firms, as in the case of "putting-out" shops obtaining orders farmed out by the "principal" -either a bigger plant or an import-export house. On the whole, the general system of recruiting labour through agents, who will each generally have a pool of workers of specialised or varied trades, entails a common form of labour subcontracting "attributed to the need of many employers to maintain a flexible 'reserve army' of casual labour". 20 Where these subcontract work groups shuttle between host firms through network hiring, they have been labelled as "ambulatory labour" that help many of the export-oriented
manufacturing firms to cope with the demands of their
product fluctuations.
The subcontracting relationship between firms
constitutes "an important element in the appearance and survival of the small firm sector".21 A survey of 159 small firms in domestic premises in 1975 showed that 40 per cent of them sold their output to other manufacturers.2 2 In a more recent study of the small-scale manufacturing sector, as many as 80 per cent of the enterprises investigated were found to be mere production shops that subcontracted from either other local factories or "import-export" houses without any direct marketing channels. 23 Table VII.2 shows the relative importance of the subcontract arrangement.
Table VII.2 Subcontracting: Sources
of orders for small-scale
enterprises
Source of orders No. of Percentage establishments of total
Import-export houses (1) 186 44.8 Local factories (2) 99 23.9 Direct overseas orders (3) 46 11.1 Wholesalers and retailers (4) 18 4.3 Direct sales to consumers (5) 14 3.4 Import-export houses with so 12.0
an element of (2), (3), (4) or (5) Others/don't know 2 0.4
Total 415 100.0
Source: Victor Sit Fung-shuen, "The nature and intensity of subcontracting in small-scale industry", in Small industrial bulletin for Asia and the Pacific (New York, United Nations), No. 17, 1981, pp. 169-174.
Inter-sectoral analysis reveals that subcontracting in the plastics industry depended predominantly upon import-export houses and, in the machinery sector, upon farming out from local factories. Conversely, both arrangements were practised to a more or less equal extent in electronics and garment-making, as indicated in table VII.3.
Despite this scope and variation of the putting-out system that sustains the small-scale manufacturing sector, employment relationships within these subcontracting shops do not differ substantially in terms of legal status from those in ordinary independent enterprises. The owner-operator, who is often the "labouring entrepreneur" himself,24 engages his assistants or helpers in the capacity of an employer. However, such small businesses probably "do not have the resources to absorb personnel overheads of the kind undertaken by larger organisations, and the majority must rely on paying good market rates (to compensate for the greater risk of intermittent employment)
....
c-
oo
Table VII.3: Subcontracting: Sources of orders for small-scale enterprises by type of industry
Type of industry Percentage of establishments
Import-Local Combi-Direct Others Total No. export factories nations overseas of estab-houses (1) (2) of (1) orders lishments and (2)
Wearing apparel 37.6 33.7 12.4 6.8 9.5 205
Plastics 72.5 5.0 11.7 8.3 2.5 120
Textiles 31.9 12.8 10.6 23.4 21.3 47
Electronics 27.3 36.4 9.1 27.3 22
20
Machinery 5.0 50.0 -25.0 10.0
Source: As for table VII.2.
and on the development of mutual trust in relations with their experienced workers".25
This type of "service" relations pertaining to "ambulatory labour" may cause problems from the point of view of the labour contract. As members of almost autonomous work groups that float and move between the
client firms who call upon their services, these workers enjoy no regularised wage relationship with the employer. Typically, recruitment takes the form of labour subcontracting, remuneration being determined on a straight piece-rate basis, and the contract between the firm and the work group, which is specific to the project concerned, lapses upon its completion.
The "ambulatory" arrangement differs from the putting-out system in that the work is carried out under the roof of the "principal" or host firm. However, these industrial work crews are more or less self-managing, and independent of the managerial prerogative of the host companies. This system of casual labour enables medium-sized and small manufacturing enterprises to vary their manpower size in line with seasonal fluctuations in production and obviates the difficulty in recruiting and maintaining a stable workforce in a tight labour market situation.
However, inasmuch as these work groups operate under the roof of the host firm like other regular workers, the question arises as to whether their members can in any conceivable manner be categorised as employees and, if so, for whom. It appears that, so far, the Labour Tribunal is ready to accept as a plausible defence the argument that the group is not directly employed by the host firm but merely engaged under the contract for services, if the.host firm so contends.26 The implication of such a ruling is that it exempts the firm from the liabilities of an employer involving the provision of such statutory benefits as sickness allowance, holidays and paid annual leave, as
well as severance pay in the event of redundancy or compensatory payments in lieu of notice upon the termination of the employment contract. It may be equally contentious to place the employer's onus upon the leader of the crew, who seldom operates as a risk-taking entrepreneur or contractor per se. Instead, it is a known practice for the leader to work simply as a member of the crew and receive his work-based share of the group's wage packet. Of course, he may be paid, in addition, a bonus by the firm
as a premium for the recruiting and supervisory services he renders, or a conunission from the levy on the payroll of every member in recognition of the leadership and negotiation he assumes for the group. The lack of unequivocal employment bonds defining relationships with and within the "ambulatory" work group hence reduces these workers to a marginal legal position, generally held to fall outside the protective ambit of the Employment Ordinance.
A paradox implied by the "ambulatory" system is "the contradiction between the flexibility it embodies on the one hand and the insecurity such flexibility entails on the other".27 Although "ambulatory" workers may enjoy the freedom of transfer between firms in a tight labour market situation and expect to maximise their short-run earnings through payment by results, their long-term income is unstable, depending on the availability of jobs that may vary widely by season. Their job security is correspondingly fragile, especially when business slackens.
Of course, labour subcontracting such as the ambulatory system has its advantages. First, it contributes to the flexibility (in manpower capacity) of export-oriented manufacturing plants and hence of the industrial economy as a whole. Secondly, these self-managing work groups absolve the host firms of the managerial problems of directly controlling workers, their commitment, motivation and productivity. Furthermore, since work is generally abundant and available from an array of mutually independent firms, there is little pressure on the ambulatory workers to develop "quotas" or other restrictive practices in order to protect the going rates of pay -so long as the demand for labour persists.
However, it remains imperative to clarify the employment status of members of ambulatory labour crews. "Without the protection of labour law, the basis of their bargaining power vis-a-vis management is fragile. Their economic strength is sustained essentially by the current labour shortage, and they risk becoming a marginal labourin~ group open to exploitation when this shortage abates." 8 In a sense, the dearth of employment protection is more or less analogous to the situation of the homeworkers, on whom empirical data have been even more scanty.
IV. PROTECTION FOR WORK INJURY, OCCUPATIONAL DISEASES, SICKNESS AND MATERNITY
IV.l Employees' compensation for work injury and occupational diseases
The Employees' Compensation Ordinance, which replaced the Workmen's Compensation Ordinance in 1980, is the principal piece of legislation governing the obligations of the employer to his employee in the event of accidents resulting in injuries occurring at work, or in the case of certain specified types of occupational disease. The Workmen's Compensation Ordinance, introduced in Hong Kong in 1953, was based upon a draft Workmen's Compensation (East and West Africa), Model Ordinance circulated to British overseas dependencies by the Colonial Office in 1937 itself adapted largely from the United Kingdom Workmen's Compensation Acts of 1897, 1906 and 1925. The 1980 rev1s1on of the legislation also extended its competent scope of jurisdiction from all manual workers and non-manual workers earning less than a specified ceiling to virtually all employees irrespective of manual versus non-manual differentials. Nevertheless, certain marginal groups are still excluded, viz. outworkers, members of the employer's family living together and casual/intermittent workers not engaged for the employer's business.
Two kinds of legal obligation are incumbent upon the employer if his employee sustains an injury as a result of an accident arising out of and in the course of his employment. The first involves the liability to pay compensation to the injured employee and, the second, the duty to notify the Commissioner for Labour of the accident. In discharge of the latter obligation, the employer is legally required to inform the Commissioner in the prescribed manner of any accident within seven days after it happens or is known to him, should the accident result in either the death or the total or partial incapacity of the employee for more than three days. However, the employer is not obliged to pay compensation should the employee suffer no permanent disability and be incapacitated from work for not more than three days as a result of the accident.
The determination of employees' compensation is governed by the dual notions of (i) periodic payments to
the injured employee to cover his temporary incapacity and inability to earn wages during the period of sick leave, and (ii) a lump-sum indemnity to compensate either death (payable to the deceased's dependants) or the injured employee's permanent incapacity and loss of earning capacity, whether total or partial.
The periodic payments, to be made on the normal pay days, are at the rate of two-thirds the difference between the employee's monthly earnings at the time of the accident (that is, his normal earnings, based upon levels prior to the accident) and his monthly earnings after the accident (which should be nil during the period of sick leave or temporary incapacity).
Should permanent incapacity, total or partial, or death result from the 1n]ury, an indemnity is payable to the disabled employee or his dependants. Compensation for permanent total incapacity had hitherto been fixed at the level of 48 months' earnings. Nevertheless, the legislative amendments of 1980 not only raised this denominator but also transformed it into a variable factor geared to age, as shown below:
Age Compensation Maximum Minimum
(months' earnings)
(HK$)
Under 40 years 96 )
)
Over 40 years but 72 ) 276 000 92 000
under 56 years )
)
Over 56 years 48 )
Correspondingly, compensation for permanent partial incapacity is normally payable in proportion to the percentage loss of earning capacity attributable to the accident, as determined by a medical assessment board according to the First Schedule to the Ordinance.
Where death results from the injury, the compensation payable to the dependants, formerly defined at a constant
rate of 36 months' earnings of the deceased employee, is governed by a separate age-specific formula:
Age Compensation Maximum Minimum
(months'
earnings) (HK$)
Under 40 years 84
Over 40 years but 60 242 000 81 000 under 56 years
Over 56 years 36
A two-tier assessment board (ordinary and special) has recently been created in place of the former one-level medical board for the determination of indemnity for permanent disability. Claims in connection with employees' compensation are normally settled by way of agreement between the injured employee and his employer. However, the claim may be enforced in a court of civil law (i.e. at the district court level or above), which is also the competent authority to:
(i)
determine the amount of compensation to be paid and its manner of allocation in fatal accidents where the deceased employee leaves only dependants who are partially and not wholly dependent upon his earnings;
(ii)
determine the sum, either by periodic payments or lump sum, payable by the employer to meet the costs of providing constant attention where this is necessary to enable an injured employee to perform the essential functions of life. Constant care payment as such is in addition to the compensation that accrues to the employee or his dependants; and
(iii) review the level of periodic payments upon application from either party.
In regulating a system of contracting and subcontracting relationships, moreover, the Employees' Compensation Ordinance prescribes the vicarious duty of the principal to pay compensation to an employee engaged by his contractor or subcontractor who sustains injury from an accident in the course of and arising out of the execution of work undertaken for the principal's business. The principal is entitled, however, by notifying the direct employer of the injured worker (his contractor or subcontractor), to recover from the latter indemnification on the compensation paid out.
Employees' compensation similar to that payable in the event of occupational accidents also applies to cases of incapacity or death of employees as a consequence of contracting certain occupational diseases. These diseases are identified by the schedule to the Ordinance.
Since 1983 it has become mandatory for the employer to take out insurance with an authorised insurer against his potential liabilities under the Employees' Compensation Ordinance. Where 1nJuries to an employee give rise to a civil liability actionable against some other person, in addition to the employer's statutory duty under the Ordinance, the injured employee may institute simultaneously any civil proceedings to recover damages from the third party apart from the need, normally, to deduct for reimbursement to the employer any civil damages thus secured from the amount of employees' compensation already paid.
IV.2 Special compensation: pneumoconiosis
Workers in the construction and quarrying industries are susceptible to the occupational hazard of damage to the lung or other respiratory organs resulting from sustained exposure to silica, asbestos and dust. Addressing this problem, the Government in 1980 adopted a major piece of legislation which departed from its traditional approach to work injury compensation (which has been to limit the obligation to compensate the employee for disability caused by work to the ambit of the employer's private liability) in the enactment of the Pneumoconiosis (Compensation) Ordinance. Thus, outside the framework of the Employees' Compensation Ordinance, a central insurance scheme was created to finance the payment of compensation to employees or their dependants for incapacity or death in employment attributed to the two principal types of pneumoconiosis -
silicosis and asbestosis. Exemplifying the notion of industry-wide collective liability, the scheme established a central Pneumoconiosis Compensation Fund by way of a flat-rate levy imposed upon every employer in the quarrying and construction industries. The Fund is administered bythe Pneumoconiosis Compensation Fund Board, a statutory but non-governmental corporate body, with its membership appointed by the Governor. The Legislative Council, upon advice from the Fund Board, prescribes the levy structure and rate. At present, all quarry products and construction works, except those worth less than HK$250,000, are subject to a levy amounting to 0.2 per cent of their contract or product market value.
The machinery defining the processing of pneumoconiosis compensation is broadly comparable to that in the event of ordinary employ,ees' compensation. However, any such claim for compensation and medical expenses should be notified within 24 months after the date of incapacity or death to the Commissioner for Labour, who makes attendant referrals to the Pneumoconiosis Medical Board for assessing incapacity
or determining the cause of death. Certification by the Medical Board as to the degree of disability shall enable the Labour Department to determine the amount of compensation payable to the pneumoconiotic or his dependants.
As in the case of employees' compensation, pneumoconiosis compensation entails payments for both temporary and permanent incapacity or death. Temporary incapacity is covered by periodic payments at the rate of two-thirds of monthly earnings over the period of certified
sick leave of at least three days' duration. On the other hand, indemnity for permanent incapacity, computed on the basis of average monthly earning levels and medicallydetermined degree of incapacity, is also tailored to agedifferentials according to sliding scales similar to those under the Employees' Compensation Ordinance.
IV.3 Sickness allowance
Initially, sickness allowance as a statutory benefit was available only to workers in the industrial sector under the 1961 Industrial Employment (Holidays with Pay and Sickness Allowance) Ordinance. These statutory entitlements were later extended to cover non-industrial employment in 1973, and became incorporated into the Employment Otdinance. Prior to 1 January 1977, the level of sickness allowance
was set at one-half of the employee's normal daily wages excluding overtime pay, but this rate has subsequently been raised to two-thirds. In the event of a piece-rated or daily rated employee, whose earnings may fluctuate from day to day, the normal daily wages are to be determined by averaging the earnings he received from the time worked during the period of 28 days preceding the beginning of his sick leave. The payment of such an allowance must be made to the employee or his authorised agent not later than the day on which the employee is next paid his wages.
There is a statutory limit to the maximum number of days for which sickness allowance is payable to the employee, although the employer is at liberty to grant this benefit in excess of the level of his legal obligation. This is at present 120 days, as revised substantially from the former ceiling of 36 days with effect from 1983. The employee accumulates his entitlement to paid sick leave at the rate of two paid sickness days for each completed month of service in the first 12 months of employment under a continuous contract, and four paid sickness days per month of service thereafter.
IV.4 Maternity pay and protection
The Employment Ordinance is again the piece of legislation that vests statutory protection on a female employee who is incapacitated from work due to pregnancy. To qualify for maternity leave, a female employee needs to have worked for the same employer under a continuous contract for a period of not less than 26 weeks. Normally, the maternity leave is to begin four weeks before the expected date of confinement and ends six weeks after the actual date of confinement. This normal period may be extended, if necessary, by a further period covering the time between the expected date of confinement and the actual date of confinement or by a period not exceeding four weeks on grounds of illness or disability arising out of the pregnancy or confinement. The special extension of maternity leave may be taken either:
(i)
wholly illllllediately before the beginning of the normal maternity leave; or
(ii)
wholly illllllediately after the end of the normal maternity leave; or
(iii) in part inunediately before the beginning and in part inunediately after the end of the normal maternity leave.
Prior to 1981, the female employee was not entitled at law to any wage payment during her maternity leave unless her own labour contract provided otherwise. However, following vociferous lobbying by labour pressure groups and the consequent inquiry by an intragovernment working group appointed in 1979, the statutory norm of paid maternity leave was introduced in 1981 under an amendment to the Employment Ordinance. As a result, a working woman may now claim maternity pay at the level of two-thirds of her daily wage, provided that she has already been employed under a continuous contract for 40 weeks and that she has notified the employer of her intention to take the leave at least 12 weeks before the expected confinement period.
Eligibility for maternity pay, however, does not apply to every case of childbirth. Instead, its application is limited to the first two surviving children so that working mothers with two children or more at the inception of this law are deprived of the benefit -an exclusion apparently instrumental for the official policy of voluntary birth control, but castigated in some quarters of public opinion as socially discriminatory against parenthood. Technically, it is therefore necessary for a pregnant female employee so qualified to take an oath before a competent authority (either the Supreme Court, the Labour Department, a City District Office or a District Office of the New Territories Administration) to testify the number of her children in order to proceed to her claim for maternity pay. She is liable to lose her entitlement should she be found to have engaged herself in alternative employment during her maternity leave without her employer's consent.
To provide protection to the female employee in respect of her job tenure, the Employment Ordinance specifies that maternity leave, whether paid or unpaid, does not in any way break the continuity of employment of a female employee in respect of her labour contract. Moreover, during the period between the date on which the pregnant employee gives notice of her intention to take maternity leave and the date on which she is due to return to work (i.e. on the expiry of her maternity leave), termination of the employee's contract by the employer is prohibited.
As a consequence of the 1981 amendments to the Employment Ordinance, termination of the labour contract, if it does occur in contravention of the above provisions, is not only a punishable offence but also entitles the female employee to retributory payment if she were eligible to maternity pay. Such compensatory payment is in addition to the sum which would have been payable already if the contract had been terminated in accordance with its terms or statutory requirements under normal circumstances.
V. THE "SOCIAL WAGE"
It has been suggested earlier that trade unions'
concentration on "welfare" functions during the 1960s
stemmed in part from the relative paucity of state-provided
social services and qmenities. However, this vacuum has
become gradually modified by increasing public investment
in extensive programmes of housing, education, medical
services and an embryonic social security scheme
administered under the aegis of "public assistance".
Although the share of government expenditure in GDP is still much below the rate for other developed economies,29 there occurred in the 1970s (especially towards the latter half) a significant growth of the public sector vis-a-vis the private economy. The average proportion of government expenditure in GDP varied around 15 per cent in the 1960s and was 14.9 per cent for 1973-74. However, during the ten-year period 1974-75 to 1984-85, the relative size of public sector spending rose from 15 per cent to around 16.5 per cent of the GDP at current prices. In money terms, public expenditure expanded from the 1974-75 level of HK$6,703 million to the 1984-85 estimate of HK$44,024 million, registering on average an annual growth rate of 20.7 per cent (nominal
increase) over these years. The share of total public sector expenditure channelled to "social services" (notably on such items as education, housing and medical and health services) receded, perhaps most remarkably, from 44.1 per cent in 1975-76 to 35 per cent in 1984-85 (table VII.4). At the same time, the relatively small allocation of government expenditure to "economic services", which actually shrank from around 9 per cent in the mid-1970s to about 3 per cent around the mid-1980s, probably attests to the limited scope of direct government involvement in economic activities in vindication of the popularised official stance of laissez-faire.
30
Table VII.4 Composition of government expenditure in Hong Kong, 1975-76 to 1984-85 (percentages)
1975-76 1976-77 1982-83 1983-84 1984-85
General services 15.0 17.7 44.0 38.0 40.0 (administration, support, public relations, revenue collection and financial control)
Security services 12.0 13.0 13.0 (defence, immigration, law and order)
Economic services 8.4 7.8 3.0 3.0 3.0 (food supply, aviation and shipping, trade and industry, posts and tele-communications)
Social services 44.1 42.0 32.0 36.0 35.0 (education, medical care, housing, social welfare, labour)
Community services 23.6 23.7 9.0 10.0 9.0 (public transport, land and civil engineering, water, public safety, recreation, culture and amenities, environ-mental protection)
Source: Hong Kong Government, Hong Kong 1985: A review of 1984, Appendices 10 and lOa, pp. 318-319.
V.1 Housing
An important item of the "social wage" that has contributed greatly to the stability of living standards and the improvement of employees' quality of life in the lower income categories has been the provision of public housing through a massive programme to remove urban slums and illegal squatting. The programme, conceived almost accidentally by the pressure to accommodate people made destitute by fires in squatter dwellings in the late 1950s, has been upgraded from the provision of crude resettlement blocks to a low-cost public housing project to provide a permanent, self-contained home for every tenant family. By 1984, about 45 per cent of the local population (2.5 million), mostly low-income families, lived in this type of state-subsidised public housing, for which rents have been kept substantially beJow market levels despite the Government's increasing readiness to raise rents to more "economic levels". Low rents have had important implications for wage levels. In a sense, manufacturers and employers during the period of industrialisation have seen their wage bills heavily subsidised from general taxation.31 Indeed, the public subsidy on housing has now been extended to middle-income groups, with the inception of a Home Ownership Scheme in 1976. The income test of eligibility for purchase of government-built residential flats (generally priced below market levels and facilitated by special mortgage arrangements) is more liberal and is set at higher income levels than the comparable income criterion for public rented accommodation. Recently, the Government has further expanded its involvement in the real estate market, with the inception of the Private Sector Participation Scheme.
V.2 Education
The expansion of educational prov1s1ons represents another development in the 1970s. After accomplishing free universal primary education by 1971, the Government has begun to commit its resources to the extension and improvement of secondary and higher education. By the end of the 1970s, the policy objective of providing six years' primary education followed by three years' secondary education had been substantially achieved, after universal secondary education up to the age of 15 was introduced in 1978, accompanied by the setting of the m1n1mum age of employment at 15 for all economic sectors. It is expected that technical education and education at the tertiary level will constitute the focus of development in education for the 1980s. In 1984, the second polytechnic (the City Polytechnic) commenced its teaching activities. During the same year, an Education Commission was appointed by the Governor to co-ordinate and give consolidated advice on educational policy in Hong Kong.
V.3 Health care
In spite of the absence of a national health service,
the public sector is the largest supplier of subsidised
medical services. Government and government-assisted hospitals provide the bulk of the 1984 total of 24,073 hospital beds, representing a ratio of 4.5 beds per 1,000 of the population. Earlier, the White Papers of 1974 and 1977 outlined a policy target of providing, before 1984-85, 4,600 new hospital beds, five clinics, two polyclinics, two health centres, a second medical school and a dental school. In conjunction with this, the official programme of medical expansion for the present decade envisages the construction of an additional four government hospitals, accounting for a planned total capacity of 6,000 beds. Added to this inventory of hospital provision is a network of 62 general out-patient clinics, polyclinics and special clinics.
V.4 Social security
Social security, in its limited form, is at present administered by the Social Welfare Department of the Government, essentially on the basis of three schemes, although the feasibility of extending the present system is being actively studied.
The existing schemes are as follows:
(i) public assistance: started in 1971. The scheme provides cash assistance to those resident citizens (domiciled locally for at least one year) whose income falls below a prescribed level (at which the essential needs can be met). The benefits are reviewed and adjusted at regular intervals to accord with rises in the cost of living, compr1s1ng a basic rate and, where applicable, old-age supplements, disability supplements and long-term supplements. The scheme is non-contributory, but eligibility for payment is based upon a means test. Formerly,
public assistance was not available to those aged
between 15 and 59 who were able to work. However, since 1 April 1977 the scope of such benefits has been extended to cover any able-bodied adult in this age category who became unemployed, provided that he or she had registered with the local employment service of the Labour Department for job placement;
(ii) disability and infirmity allowance: introduced in 1973. This allowance caters for two vulnerable groups the severely disabled, and those elderly persons aged 70 and above who are not domiciled in a residential care institution. The allowance, which is non-contributory and is not means tested, is additional to any entitlement to public assistance;
(iii) criminal and law-enforcement injuries compensation: commenced in 1973. This scheme, which is subject to a minimum residence period, assists victims of crimes of violence and people who are accidentally injured by law-enforcement officers during the course of their duties. The benefit, which is not means tested, is administered by the Criminal Injuries Compensation Board and the Law Enforcement Injuries Compensation Board;
(iv) traffic accident victims assistance: inaugurated in 1979. The Traffic Accident Victims Assistance Fund, administered centrally by the Social Welfare Department and financed by levies on vehicle and driving licences and from public revenue, extends cash grants to traffic accident victims or their dependants on a non-retributory basis, notwith-standing the degree of their responsibility for the accident.
Outside these schemes, the victims of natural disasters (such as typhoons and fire) are also covered bythe official provision of emergency relief, normally in the form of cash, material aid and accommodation.
In 1979, a comprehensive White Paper on Social Welfare in the 1980s was issued by the Government, laying down the agenda for a ten-year development programme. The blueprint envisaged major improvements in the existing scheme of public assistance and proposed other changes in social welfare prov1s1ons, particularly for the elderly, which reflected the Government's changing stance towards the role of the State in "social security" investment. Notwith-standing, the administration is still intent on maintaining the "public assistance" scheme "to provide help on a means-tested basis to those in the community with the least money". 32 As such, it is a conservative "income subsidy scheme rather than a social insurance scheme", although it does testify to "an official recognition that a problem of
'the working poor' exists, even if its implied poverty line is �E�E�E rather austerely drawn".33
It is difficult to determine the poverty line in Hong Kong, in view of the inadequacy of earning and household income statistics.34 However, according to the estimate by Turner et al., in the late 1970s, "between 5 and 10 per cent of Hong Kong workers are below the poverty line by public assistance standards".35 That such a phenomenon exists has provided a potent argument in support of "minimum wage" legislation at the economy-wide level.36
Apart from the availability of public assistance for unemployed persons, there is at present no employee-specific social security programme providing for their financial needs for sickness, injury, death and retirement. In their territory-wide employee survey of 1976, Turner et al. discovered that a considerable majority of the factory workers who "preferred better social services and more job security to higher wages" were ready to see an improvement in the "social wage" as a possible alternative to increased direct income.37 Their consequent recommendation for "a general sickness, injury and death benefit scheme possibly financed by levy on employers' wage bills"38 coalesced with the official proposal, canvassed under a 1978 policy Green Paper entitled A Programme of Social Security Development, that such a scheme of benefits should be set up and administered centrally by a statutory body. Nevertheless, owing to the technical complexities envisaged and to uncertainties about official and private sector commitments, the plan has not been put into implementation in spite of the time that has elapsed since its publication.
Vociferous debate persists in the employment sector about the relative wisdom, as a principle for future public policy, of incorporating these employee benefits and social security measures into the consolidated framework of a
central social insurance scheme or, alternatively, leaving them under the purview of the employer's private liabilities. When the Government introduced at the beginning of 1986 a new obligation upon the employer under the Employment Ordinance with regard to long-service payments, the enactment provoked strong criticism or even opposition in certain vocal sectors of the labour movement. These statutory improvements are feared, it seems, for their implied possibility of pre-empting a future central provident or social security scheme with an arrangement that perpetuates the conservative principle of private liability on the part of the individual employer.
Notes
It does imply, however, a total state of "normlessness" outside industry. The Dutiable CollU!Iodat ions (Liquor) Regulations have been on the statute book prohibiting children below the age of 15 from working in premises with a liquor licence, as well as the employment of any female under the age of 18 except with the prior consent of the authority. Prior to 1979, child labour under the age of 14 was outlawed, but for industrial employment only. Nevertheless, the passage of the Employment of Children Regulations under the Employment Ordinance in 1979 extended the legal ban on child labour to all economic sectors in addition to manufacturing. At present, these Regulations stipulate the minimum age of employment as 15.
Hong Kong Hansard, Session 1922, p. 95.
ibid., p. 93.
4 H.R. Butters, Report by the Labour Officer on labour and labour conditions in Hong Kong, Hong Kong: Government Printers and Publishers, 1939, para. 81, p. 123.
5
Thus, prior to 1958, Regulations 8 and 9, which applied to women and young workers in industry, were "primarily intended not to restrict working hours as such but to prevent women and young children from being employed at night". Theoretically, it had been permissible "to employ a woman or young person of 16 or over in industry for 13 hours a day for 365 days of the year". Such legal restrictions were only in operation for young persons between the ages of 14 and 16 before 1958. Hong Kong Hansard, Session 1958, p. 283.
6 ibid�E�E p. 285.
7 In operational terms, the application of this rule was given the following interpretation:
Overtime within the limit of ten working hours a day or 60 hours a week may be worked without restriction, the employer merely posting up a notice on his factory on the day overtime is worked setting out the hours to be worked. Overtime bringing the hours of work up to 11 in a day or involving work between 8 p.m. and 9
p.m. can also be worked, provided that the total working hours in any week do not exceed 66 and that the Labour Department is notified. No special permission is required, but overtime which has to be reported to the Labour Department must not take place in more than 25 weeks in the year and must not exceed 100 hours in aggregate during any year.
ibid.
8 Thus, as observed by Turner in this connection:
There seems little doubt as to the stimulative effect of the 1967 events in this connection �E.�E up to 1968 an average of seven such items (of labour legislation) were adopted in each year, but from 1969 to 1977 the figure more than doubled, to 15. �E�E�E Of 78 "major" legislative items, passed from 1963 to mid-1977, 44 involved safety or health, workmen's compensation, or physical working conditions and equipment
H.A. Turner et al., The last colony: But whose?, Cambridge: Cambridge University Press, 1980, pp. 105-106.
9
Thus, not only were such innovations instigated by "reformist intentions on the part of administrators themselves" and by "unfavourable international comparison or external criticism" but they were also consistent with "the anxiety of the more established and major business or professional interests, which have always had a central influence in Hong Kong, both to forestall internal complaint and to present an acceptable external front".
ibid.�E p. 105.
1 �X For an outline of the legislative mechanism, see Hong Kong Hansard, Session 1967, pp. 348-350. See also ibid., pp. 481-487 for the exchanges in the Legislative
Council debate on the rationale of the 1967 amendments to the Factories and Industrial Undertakings Regulations in this respect.
11 Hong Kong Legislative Council Proceedings 1976-77, p. 320.
12 See the exchange between the Commissioner for Labour and Lydia Dunn (unofficial member) in the Legislative Counci1 �E Hong Kong Hansard, Session 1979/80, pp. 279-280.
13 On other related objectives of this study, see Ng Sek-hong, "Academic resources for innovation in labour administration", in June Whittaker and Manalo Abella (eds.), Labour administration: A role for universities and research institutions, Bangkok: ILO, 1982, pp. 45-46.
14 These industrial firms forming the primary sampling frame were selected scientifically, through the method of stratified sampling (by size) of the nine major industry categories listed by the Hong Kong Census and Statistics Department. These industries included food, beverages and tobacco; textiles and wearing apparel; paper, paper products, printing and publishing; plastics products; fabricated metal products; electrical and electronic machinery, apparatus and appliances; professional and scientific, measuring and controlling equipment; and other manufacturing activities. The general rule was to interview five female workers from each establishment. If possible, these interviewees were to be chosen randomly by the interviewer on the basis of clock-in attendance cards or seating arrangements. Otherwise, management was asked to choose the five female workers from the firm for interview. As an indicator of the representativeness of the sample, the age distribution of women yielded by the survey corresponded closely to the results of the Labour Force Survey of the Census and Statistics Department (Sep. 1980) by age group.
15 For instance, married women were found more likely to prefer substituting work for leisure within reasonable limits so as to earn some supplementary income for the family; daily rated workers desired elasticity of work arrangements so as to make up for the reduced earnings from a previous short-time week, e.g. by resorting temporarily to a seven-day week or increased overtime while the cyclical business of the firm recovered; there were
others who found the work itself intrinsically rewarding and satisfying or who would like to see the completion of a task or product even though it might call for the intermittent extension of the working day or week.
16 Nicholas Owen, "Manpower deficiencies and industrial training", in Hong Kong economic papers, 1972, p. 57.
17 In 1977, outworkers totalled 53,000 and, in 1981, the figure was 55,688. See Hong Kong Census and Statistics Department, Report on September 1977 labour force survey, tables 11 and 25; Hong Kong 1981 Census, basic tables, pp. 16-17.
18 Joe England and John Rear, Industrial relations and law in Hong Kong, Hong Kong: Oxford University Press, 1981, p. 43.
19 Frank Leeming, Street studies in Hong Kong, 1977, p. 79.
20 Turner et al., op. cit., p. 49.
21 England and Rear, op. cit., p. 43.
22 Victor Sit Fung-shuen, Factories in domestic premises: A study of informal sector manufacturing in urban Hong Kong, Hong Kong, mimeographed, 1977.
23 The study was carried out in 1978, covering a sample survey of 415 small-scale industrial enterprises that employed between ten and 49 persons. Victor Sit Fung-shuen, "The nature and intensity of subcontracting in small-scale industry" in Small industrial bulletin for Asia and the Pacific (New York: United Nations), No. 17, 1981, pp. 169-174.
24 Sit in his study discovered that 60 per cent of the small-scale entrepreneurs were previously manufacturing workers, most of whom were "doing the same job as before". The small manufacturing enterprises appeared to "supply a means whereby skilled ex-industrial workers make their debut as manufacturing entrepreneurs". Victor Sit Fung-shuen, Preliminary report on the development of small manufacturing enterprises in Hong Kong, University of Hong Kong, mimeographed, 1978.
25 Turner further points out that these measures include "not merely compensating longer-established workers with good wages and some measure of personal security but also developing work relations which are less disciplined, more egalitarian and easy-going in small business, and emphasising ties of kinship or common regional origin". Turner et al., op. cit., p. 48.
26 Victor Sit Fung-shuen and Ng Sek-hong, "Ambulatory labour in Hong Kong", in International Labour Review (Geneva, I LO) , Vol. 119, No. 4, July-Aug. 1980, p. 510.
27
ibid.' p. 512.
28 ibid., p. 513.
29 The share of government expenditure in GDP is around 50 per cent for the United Kingdom and the Federal Republic of Germany. Singapore, whose stage of development is very comparable to Hong Kong's, spends about 24 per cent of its GDP on government expenditure. See United Nations, Statistical Yearbook 1977, New York, 1978; and H.C.Y. Ho, "Government expenditure and economic development in Hong Kong", in Leung Chi-Keung et al. (eds.), Hong Kong: Dilenuna of growth, Hong Kong: Centre of Asian Studies, University of Hong Kong, 1980, p. 197 and its note (12).
3 0 Hong Kong Government, =H'-=oC.::n:.C:g'--:--=-K=o:.:n.:..g,.__-'lc-9::-8::-=-5.:.:_ _:_:A:.___-=r-=e:...:v-:i=-:e;..:.:wof 1984, Hong Kong: Government Printer, 1985, pp. 96-97, alsop. 319 (Appendix lOa).
31 England and Rear, op. cit., p. 365.
3 2 Hong Kong Government, Social welfare in Hong Kong: The way ahead, Hong Kong, Government White Paper, Hong Kong: Government Printer, 1973, para. 5.2.
33 Turner et al., op. cit., p. 82.
34 See, for instance, ibid., pp. 63-67 and pp. 81-83.
35 ibid., p. 83.
36 ibid.' pp. 165-167; also England and Rear, op. cit., p. 371 and p. 374.
37 Turner et al., op. cit., p. 141.
38 Thus, the researchers claimed: the high worker concern for security which our own inquiry indicates combines with employees' expressed willingness to contribute to its protection, to suggest a contributory unemployment benefit and pension scheme .�E�E Such a system would strengthen the less organised and less mobile worker's bargaining position; it could narrow the very considerable inequalities in fringe benefits and security between the labour force's upper and lower strata; it could reduce the immobilities involved in the dependence of more qualified and experienced employees on the security provisions of individual firms". ibid., p. 168.
CHAPTER VIII
FOREIGN INVESTMENT AND SOME CURRENT INDUSTRIAL RELATIONS ISSUES
I. FOREIGN INVESTMENT AND ITS IMPLICATIONS
I.l Trends in foreign investment and the economy
Foreign investments in the export-oriented manufacturing sector have expanded substantially during the last decade. Their value rose by 157.1 per cent, from HK$759.5 million in December 1971 to HK$1,952.4 million by the end of 1976, at a rate which was highest among Hong Kong major industrial statistics during this five-year period, and outpaced the average industrial growth in Hong Kong. Over the ten-year period between December 1971 and December 1981, the size of investments grew by more than eight times, achieving a level of HK$7,023.1 million at the beginning of the 1980s.1 Table VIII.1 gives indicators of industrial growth between 1971 and 1981.
Notwithstanding this magnitude of growth, the number of foreign manufacturers (395) represented a mere 0.86 per cent of the total number of manufacturing establishments (47,996) in December 1981. However , the average size of foreign industrial enterprises is much larger than that of indigenous firms. According to an industrial survey by the Industry Department in 1981, 10.2 per cent of the 391 foreign industrial enterprises employed 500 workers or more, as compared with 0.3 per cent for all manufacturing establishments in Hong Kong (tabie VIII.2).
These enterprises of foreign capital were responsible, in 1981, for 9.94 per cent of Hong Kong's total industrial employment and, in 1980, 16.8 per cent of its total
191
Table VIII.l Indicators of Hong Kong's industrial growth, 1971-81
Indicator 1971 1981 Percentage increase
Foreign investment in the 759.5 7 023.1 824.7 manufacturing sector (in HK$ million)
GDP at current market 20 976 137 377 554.9 prices (in HK$ million) Domestic exports (in HK$ 13 750 80 423 484.9 million) Number of manufacturing 18 612 47 996 157.9 establishments Industrial employment 564 370 905 899 60.5
Note: The 1976 GDP at current market prices is a preliminary estimate given in the Financial Secretary's report, The 1977-78 budget: Economic background.
Source: Hong Kong Government, Annual reports and Monthly digests of statistics. C.L. Hung, "Foreign investments", in David Lethbridge (ed.), The business environment in Hong Kong, Hong Kong: Oxford University Press, 2nd edition, 1984, table 6.4, p. 214, and table 6.5, p. 189.
exports.2 In terms of capital size, the majority of them were also medium to large firms. 3 By 1982, the number of foreign enterprises in the manufacturing sector rose to 438; and by 1984 foreign firms accounted for 89,000 employees (or 10 per cent of the economy's industrial labour force) and for direct investment of HK$27,209 million.4
I.2 Composition of foreign investment
Industrial investments by foreign capital are clustered around several key industries. According to the statistics for December 1982 released by the Hong Kong Industry Department, 36.5 per cent of foreign capital was invested in the electronics industry and spread over 64 establishments. Textiles and garment-making came second,
Table VIII.2 Size of employment in manufacturing, 1981
Number of All manufacturing Establishments of
employees establishments foreign ownership
Number Percentage Number Percentage of total of total
1-9 30 541 65.4 13 3.3 10-19 7 294 15.6 37 9.5 20-49 5 198 11.1 78 19.9 50-99 2 181 4.7 75 19.2 100-199 958 2.1 74 18.9 200-499 419 0.9 74 18.9 500-999 105 0.2 25 6.4 1,000 and over 34 0.1 15 3.8
Total 46 729 100.0 391 100.0
Source: Hung, 1984, op. cit., table 6.5, p. 215, and table 6.9, p. 195.
accounting for an 11.6 per cent share of foreign investment in 95 establishments. However, foreign enterprises in the electronics sector were probably larger in size, so that together they employed more workers than their counterparts in textiles and garments, in spite of their smaller number (table VIII.3). Other industries where foreign investment has made an appearance albeit on a smaller scale include building and construction, chemicals, electrical products, food and beverages, watch and clock accessories, metal works and printing.
The United States is by far the largest supplier of foreign capital in Hong Kong, and in 1984 was responsible for 54 per cent of direct overseas investment. Ranking second is Japan, whose comparable share in 1984 was 21 per cent, while the United Kingdom comes third, with about 7 per cent of the total. Table VIII.4 indicates the shares (in both monetary and relative terms) of investing countries to overseas capital in Hong Kong in 1982, as well as the number of industrial establishments attributable to each.
Table VIII.3 Direct overseas participation in Hong Kong manufacturing industries by industry on 31 December 1982
Type of industry Direct overseas investment No. of establish- No. of employees
ments
(HK$ million) Percentage of total
Electronics 2 762.0 36.5 64 29 114
Textiles 876.3 11.6 95 20 234
and garments Building and construction 790.4 10.5 13 1 445
materials
Chemical 483.9 6.4 23 1 300
products Electrical 477.8 6.3 32 8 333
products Food and 386.7 5.1 19 3 169
beverages Watches/clocks&accessories 384.4 5.1 41 9 125
Metal 250.2 3.3 30 2 337
products Printing and publishing Non-electrical 184.6 183.7 2.4 2.4 11 20 1 532 1 903
machinery Transportequipment Toys Others 154.5 125.1 503.1 2.0 1.7 6.7 4 13 73 1 834 4 738 7 739
Total 7 562.7 100.0 438 92 803
Note: These figures exclude 50 companies which were known to have overseas interests but the particulars of which were not available.
Source: Hong Kong Industry Department, Jan. 1983.
Table VIII.4 Direct overseas participation in Hong Kong manufacturing industries by source on 31 December 1982
Country or area
United States Japan United Kingdom Switzerland Netherlands Denmark Australia Singapore Taiwan, China France Philippines Fed. Rep. of Germany Thailand Others
Total
Direct overseas
investment
(HK$ million)
3 526.6 2 278.1
448.5
200.8
189.9
160.6
158.9
124.2
96.1
75.5
50.6
43.5
39.1
170.3
7 562.7
Notes: (1) The actual total number
Percentage of total
46.6
30.l 5.9 2.7 2.5 2.1 2.1 1.6 1.3 1.0 0.7 0.6 0.5 2.3
100.0
No. of establish-ments
119 125 49
23
8
4
22
17
24
5
5
25
13
47
486
of establishments is
438. The discrepancy reflects the fact that some companies are joint ventures involving more than one overseas interest.
(2) The figures exclude 50 companies which were known to have overseas interests but the particulars of which were not available.
Source: Hong Kong Industry Department, Jan. 1983.
I.3 Rationale of foreign investment
In a study conducted by Hung in 1976-77 on foreign firms in Hong Kong and updated in 1979, the incentives of 56 such enterprises to invest and operate locally were investigated. The 1979 data, covering 108 foreign manufacturers in Hong Kong, indicate the relative importance of various investment factors to the respondent companies, as well as the degree to which investment factors were seen to be favourable in the Hong Kong context. In descending order of importance to the process of manufacturing operations, these investment factors, classified into five groups, were placed by these foreign firms in the following ranking:
(i)
production input factors: availability of managerial skills; labour supply, cost of land, office and factory space, and productivity; raw material supplies;
(
ii) stability factors: currency stability; domestic economic stability; labour-management relation-ships; and political stability;
(iii) incentive factors: business laws and regulations; corporate taxes; exchange controls; and government policy towards foreign investment;
(iv)
marketing factors: geographiral location; local market potential; and trade restrictions on imports and exports;
(v)
indirect factors: educational level of population; financial maturity; general attitude towards foreigners and foreign companies; government's integrity and efficiency in administration; and social services.
Paradoxically, the rating by the respondent firms of the favourability of these factors is negatively correlated with their rank order of relative importance (tables VIII.S and VIII.6). "The production input factors which foreign manufacturers considered as most important were at the same time rated as the least favourable. All four production input factors were in the first quartile in order of importance, but three of them were in the last quartile of the favourability ratings. The stability factors which were next in importance were also relatively poorly rated�E�E�E�E On
Table VIII.5 Importance of investment factors to foreign enterprises
Descending Investment factors order
1 Labour supply, costs and and productivity 2 Cost of land, office and factory space 3 Availability of managerial
skills 4 Currency stability 5 Raw material supplies 6 Labour-management relationships 7 Corporate taxes 8 Trade restrictions on imports
and exports
9 Domestic economic stability 10 Political stability 11 Business laws and regulations 12 Exchange controls 13 Financial maturity 14 Government policy towards
foreign investment 15 Local market potential 16 Government's integrity and
efficiency in administration 17 Geographical location 18 General attitude towards
foreigners and foreign
companies 19 Social services 20 Educational level of population
Weighted score of importance
184
173
161
133 127 125 124 124
121 118 102 99 99 97
92 89
82 77
75
Note: (1) Number of respondent foreign firms = 108.
(2) The weighted score is made up of three elements: vitally important = 2; important 1; not important/irrelevant =0.
Source: Hung, 1984, op. cit., table 6.12, p. 201.
Table VIII.6 Favourability of investment factors in Hong Kong
Descending Investment factors Average order score
1 Exchange controls 3.9 2 Corporate taxes 3.5 3 Trade restriction on imports 3.5
and exports 4 Business laws and regulations 3.0 5 General attitude towards foreigners 3.0
and foreign corporations 6 Financial maturity 2.9 7 Political stability 2.7 8 Geographical location 2.6 9 Government policy towards foreign 2.5
investment 10 Availability of managerial skills 2.2 11 Labour-management relationships 2.1 12 Educational level of population 1.8 13 Social services 1.6 14 Domestic economic stability 1.5 15 Government's integrity and 1.4
efficiency in administration 16 Local market potential 1.0 17 Raw material supplies 0.6 18 Currency stability 0.2 19 Labour supply and cost 0.1 20 Cost of office and factory space -3.8
Notes: (1) Number of respondent foreign firms: 108.
(2) The average score is computed from a favourable versus unfavourable scale, with an assigned value of 5 and -5 at either end.
Source: Hung, 1984, op. cit., table 6.13, p. 202.
the other hand, the incentive factors which were placed near the middle in order of importance were rated as the most favourable factors, while the marketing and indirect factors were considered as more satisfactory than the production input and stability factors."5 In this connection, the permissiveness of the institutional framework (including such factors as favourable attitudes towards foreign corporations, low corporate taxes, liberal exchange controls and tariff restrictions, etc.), as well as a supportive and stable infrastructure (in respect of currency stability and developed financial institutions), were seen to be most conducive to the investment activities experienced by these foreign firms in Hong Kong.
Given these attributes, Hong Kong has been able to attract the largest portion of United States direct investment among countries in the South-East Asian region (table VIII.7).
Table VIII.7 United States direct investment in South-East Asia, 1981 and 1980
Country United States Percentage of Percentage or area direct investment United States growth (US$ million) investment in region
1981 1980 1981 1980 1981/1980
Hong Kong 2 655 ( 2 078) 24 (24) 27 Indonesia 1 961 (1 314) 17 (15) 41 Singapore 1 791 (1 204) 16 (14) 48 Philippines 1 294 (1 259) 12 (15) 2 Malaysia 849 (632) 8 (7) 34 Republic of 778 (575) 7 (7) 35
Korea Taiwan, 574 (498) 5 (6) 15 China Thailand 551 (361) 5 (4) 52
Source : Hung, 1984, op. cit.
II. PERSONNEL PRACTICES OF MULTINATIONAL ENTERPRISES
It has been mentioned that multinational enterprises are generally bigger in scale than local firms and, as such, tend to provide superior conditions of employment. Similar findings are available, for instance, from the Turner study of the late 1970s. Table VIII.8 shows that 26 per cent of the employees surveyed were engaged by overseas non-British enterprises, and of this group 74 per cent worked in enterprises with 100 or more employees. Table VI.4 showed that these firms provided more favourable employment conditions than their average local counterparts. However, when compared to the Government and British enterprises, the other multinational enterprises were more concerned with short-term incentives and bonus items like attendance bonuses and meal allowances. On longer term commitments such as pensions, the category of "other multinationals" stood about midway between the Government and British multinationals in the upper tier and the local Chinese enterprises on the lower tier. It is often argued that a portfolio of employment benefits that appealed to shorter term needs would be more effective in attracting industrial production workers. In this connection, the multinational enterprises, which were clustered in the manufacturing, transport and communications sectors in Turner's study,6 could have adjusted their "fringe benefit" package to lay heavier emphasis on those items from which the workers could obtain more immediate satisfaction. That the multinational corporations on the whole pay higher wages than other employers has been confirmed in a recent pay trend survey conducted by the Hong Kong Institute of Personnel Management. 7
Another distinctive feature of foreign capital in Hong Kong is the role of multinational management in implementing "scientific management" practices, manifested in such aspects as rational systems of control, superv1s1on, payment and work organisation. Such workplaces " .�E�E are air-conditioned, clean and spacious. A three-shift system is usual. Because of the delicate nature of the assembly work, employees are paid a flat daily rate rather than by piece-work. A concomitant of this is a high degree of superv1s1on to ensure that production is maintained at a satisfactory level".8 Such characterisation of a multinational industrial plant is corroborated by Turner et al:
The American-associated electronics firms stress the
importance, for their young labour force, of
"civilised" work conditions, night classes and
recreational facilities where they can maintain
friendships. This is linked to a special striving for
good relations with superiors and workmates in the firm, underlined by the increasing use of personnel management staff whose prime function seems to be to iron out interpersonnel conflicts and to get a "good company spirit" going, conveying images of Japanese paternalism mixed with American corporate management styles.9
Given this emphasis upon welfare "corporatism" and scientific management, England and Rear observe that the American multinationals tend to avoid, where possible, the organisation of their employees into trade unions; " .... �E a refusal to recognise or deal in any way with trade unions, a policy laid down by the American head office".10 As a pre-emptive strategy of peaceful competition vis-a-vis trade unionism, there is an emphasis on developing a strong personnel management department to enhance in-plant "human relations" and inculcate identification with the firm among the employees. As England and Rear note:
This device is based upon such views as: 'People only join a union if there is no third party to represent their demands to management'; and 'I don't believe in collective bargaining as a weapon. It is much better to have personal contacts between the boss and the worker on an individual basis' . 11
The American group of electronics plants, moreover, is known to operate a form of wage club. Through fora such as that provided by the American Chamber of Commerce, their personnel managers meet regularly to co-ordinate their wage, recruitment and employment policies. Within this circuit of American electronics companies, firms which share the same technology, and product and labour markets, and where family or ethnic ties are common, are most likely to seek a measure of control on the industry's pattern of wages and conditions.12 However, in spite of "mutual understanding of what is the proper pay range", these attempts to maintain a united front on wages are hardly tenacious, often due to pressure of (production) demand and competition for semi-skilled labour in short supply.13
According to a comparative study of management practices in an American and a Japanese firm in the late 1970s, the latter was found to be more ethnocentric than the former -inasmuch as "the American factory recruited most of its high-level administrators and supervisors in Hong Kong, while the Japanese factory relied more heavily on personnel sent from Japan".14 This characteristic of Japanese management was paralleled by two features discovered in the study: (i) the less elaborate supervisory system of control; and (ii) the lower average educational background of supervisory/managerial staff in the Japanese multinational enterprise.15 Furthermore, the repercussions of multinational enterprise employment upon the work attitude of the locally recruited labour force were also explored, suggesting some further differences between the American and the Japanese systems. It was thus reported: