XN000022-1977-06-01 — Page 4

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+ IT IS NOT UNCOMMON FOR FACTORIES TO HAVE A LABOUR TURN-OVER OF BETWEEN 5 TO 10 PER CENT PER MONTH, NOR IS IT UNCOMMON TO FIND IN A FACTORY THAT MORE THAN ONE-QUARTER OF ITS WORKERS HAVE LESS THAN TWO YEARS OF COMPANY SERVICE AND MORE THAN ONE-HALF OF ITS WORK FORCE HAVE LESS THAN FIVE YEARS OF COMPANY SERVICE, HE SAID,

TO SUBSTANTIATE HIS OBSERVATIONS DR. CHUNG QUOTED STATISTICS WHICH SHOWED THAT THE NUMBER OF PERSONS ENGAGED IN THE MANUFACTURING

INDUSTRY INCREASED FROM 600,000 IN DECEMBER 1974 TO ALMOST 780,000 IN DECEMBER 1976.

+THIS SHOWS THAT AT LEAST 180,000 INDUSTRIAL WORKERS OR 23 PER CENT OF THE PRESENT LABOUR FORCE IN MANUFACTURING INDUSTRY ARE NOT QUALIFIED FOR ANY SEVERANCE PAY, HE SAID, SUCH A HIGH PERCENTAGE WILL FURTHER BE BOOSTED BY THE EFFECT OF HIGH LABOUR TURN-OVER.

+CONSEQUENTLY, IT IS NOT UNREASONABLE TO ASSUME THAT, ON AVERAGE MORE THAN ONE-QUARTER OF THE WORK FORCE IN A FACTORY HAVE NOT BEEN EMPLOYED UNDER A CONTINUOUS CONTRACT FOR A PERIOD OF 24 MONTHS AND ARE THEREFORE NOT QUALIFIED FOR SEVERANCE PAY.

+FURTHERMORE. IF AN EMPLOYER PRACTISES THE PRINCIPLE OF LAST-TO-COME, FIRST-TO-LEAVE' IN REDUCING HIS LABOUR FORCE IN TIMES OF BUSINESS RECESSION, AN EMPLOYER WILL NOT, AGAIN ON AVERAGE, BE REQUIRED TO PAY ANY SEVERANCE COMPENSATION, AT LEAST BY LAW, UNTIL HIS WORK FORCE IS REDUCED TO LESS THAN 75 PER CENT.+

IN ADDITION, HE SAID, WITH MAXIMUM SEVERANCE PAY LIMITED TO 12 MONTHS WAGES, COMPANY SERVICE BEYOND 24 YEARS BASED ON THE NEW RATES WOULD NOT BE COUNTED FOR CALCULATION, WHICH WAS ANOTHER RELIEF FOR EMPLOYERS.

FROM THE VIEWPOINT OF THE EMPLOYEE, DR. CHUNG SAID, ASSUMING $30 AS THE CURRENT AVERAGE DAILY WAGE, EVEN WITH THE PASSING OF THE BILL, ONLY 11 OF A WORKER'S 24 YEARS SERVICE WOULD BE COUNTED AND HE WOULD GET $4,290 FOR THIS SERVICE.

+I AM SURE NO HONOURABLE MEMBER IN THIS COUNCIL WILL SAY THAT SUCH AN AMOUNT IS OVER GENEROUS,+ HE SAID,

HE NOTED WITH SYMPATHY THE SERIOUS CONCERN OF CERTAIN EXPORT- ORIENTED INDUSTRIES, WHOSE PRODUCTS WERE MARGINALLY COMPETITIVE- IN WORLD MARKETS, ABOUT RISING PRODUCTION COSTS AS A RESULT OF THE BILL.

HE SAID, HOWEVER, THAT UNDER THE CIRCUMSTANCES IN HONG KONG AT PRESENT, IT WAS NOT RIGHT TO HOLD UP OR EVEN SLOW DOWN THE SOCIAL PROGRESS AND ECONOMIC DEVELOPMENT IN ORDER TO LET A FEW MARGINAL INDUSTRIES REMAIN MARGINALLY COMPETITIVE.

+THERE ARE OTHER BETTER AND MORE EFFECTIVE WAYS TO HELP THESE MARGINAL INDUSTRIES,+ HE SAID. HE NOTED TWO POSSIBLE ALTERNATIVES FOR THEIR EMPLOYERS TO TAKE: ONE WAS TO CHANGE THE IR BUSINESS AND REMAIN IN THE HIGH-COST TERRITORY, THE OTHER WAS TO SHIFT THEIR BUSINESS TO A LOW-COST TERRITORY,

HE ADDED

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