XN000022-1997-01-29 — Page 64

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Reply:

Mr President,

(a)

We do not keep statistics on the approved ex-gratia payment as a percentage of the applicants' entitlement. We only have statistics on the percentage of applicants recovering their full entitlement in respect of arrears of wages (AW), wages in lieu of notice (WILON) and severance payment (SP) before and after the resolution came into effect on 2 February 1996:

Percentage of applicants recovering their full entitlement

1.4.95 - 1.2.96 (under previous ceilings)

2.2.96 - 31.12.96 (under new ceilings)

AW

81.76%

92.30%

WILON

67.11%

97.66%

52.5%

70.76%

SP

(b)

(c)

(d)

During the 11-month period from 2 February 1996 to 31 December 1996, the amount of ex-gratia payment paid out from the Protection of Wages on Insolvency Fund (the Fund) was $171m. This represents an increase of 86% as compared to the amount of $92m paid out in the 11- month period prior to 2 February 1996.

As at 31 December 1996, the Fund Board had a total accumulated fund of $865m.

The Fund Board has expressed deep concern over the sharp increase in the amount of ex-gratia payment paid out after the resolution came into effect in February 1996. It is estimated that the annual surplus of the Fund will fall from $113m in 1995/96 to $40m in 1996/97 and further to only about $5m in 1997/98. The effect of the new coverage has yet to be fully felt because over 30% of the applications approved during the 11- month period ending December 1996 were still paid under the previous ceilings. The Fund Board will therefore be in a better position to assess the full impact of the resolution later this year.