XN000022-1996-07-03 — Page 38

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16.

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Reply:

(c)

Mr President,

whether consideration will be given to increasing the number of inspection staff in the Labour Department in order to step up the prosecution of employers who fail to take out workmen's compensation insurance policy for their employees, so as to reduce the number of cases handled by the Board, thus avoiding the danger of the Fund going bankrupt?

Since its establishment in 1991, the Employees Compensation Assistance Fund Board (ECAFB) has handled a total of 93 claims. Apart from the two recent cases, each of which involved payments in excess of $13 million, all other claims involved payments of less than $2.5 million each. The vast majority of the claims i.e.79 claims or 85% involved payments of less than $1 million.

As regards part (a) of the question, ECAFB is currently processing 9 cases. Like all previous cases, they involve employees without cover of employees compensation insurance. We estimate that the current balance of the Fund is more than sufficient to meet the payments arising from these 9 cases. This is based on our assessment that none of the 9 cases would involve huge payments. Furthermore, as at 28 June 1996, the Fund has a balance of $59.2 million which would be increased by the projected income from the employees' compensation insurance levy of $21 million for the rest of 1996/1997. This far exceeds the average payments in the past five years of around $13 million per year.

As regards part (b) of the question, we are constantly monitoring the operation of the Fund. At present, the Fund is financed by a steady source of income from a 1% levy on employees' compensation insurance premium payable by employers. The amount is collected from the insurers by the Employees' Compensation Insurance Levies Management Board. The Government has not provided any capital injection into the Fund and we do not see the need to do so.

As regards part (c) of the question, a total of 123 Labour Inspectors are deployed, among other duties, to inspect industrial and non-industrial establishments to ensure that employers have taken out policies against their liabilities under the Employees Compensation Ordinance. In 1995, Labour Inspectors conducted 58,000 inspections and took prosecution action against 530 employers. We consider that the existing staffing establishment adequate for the purpose. The Department will of course continue its vigilant enforcement of the compulsory insurance provisions under the Ordinance.

End