TNAG-0789-FCO40-993-Development-of-social-policy-in-Hong-Kong-proposed-contribut-1978 — Page 11

CONFIDENTIAL

1.

2.

3.

4.

CONTRIBUTORY SICKNESS, INJURY AND DEATH BENEFIT SCHEME

This note is intended to provide an appreciation of the social security situation in Hong Kong in the light of the further consideration that the Hong Kong Government have given to the contributory sickness, injury and death benefit scheme set out in the 1977 Green Paper "Help for those least able to help themselves".

Any consideration of the contributory scheme has to be set against the background of the overall social security postion. In particular, it has to be seen against the proposals in the Green Paper that have already been implemented or are about to be implemented, against the background of the very considerable progress that has been made in the 1970s on social security and against the background of the proposed considerable additional expenditure on other areas of social services in the years immediately ahead.

I - Difficulties of introducing the scheme

It is accepted that a compulsory scheme would be simpler both operationally and actuarily for a given number of people than a voluntary scheme. A compulsory scheme was not however within the scope of the Green Paper last year which is why it was not dealt with there. Any contributory scheme is normally more expensive to administer than a non-contributory non-means tested scheme: though for a given number of cases it is more economical than a means tested scheme. The latter makes up for this by concentrating resources on those most in need. It is further accepted that it is easier to introduce a contributory scheme if you begin with a clean slate with no means tested or occupational benefit schemes to take into account. But in practice contributory schemes in nearly all countries (so far as I am aware) have developed later than and in the wake of means tested schemes; and sometimes also in the wake of occupational benefit schemes.

The different approaches that contributory, means tested and occupational benefit schemes involve have therefore had to be married together in an overall social security system in the best way possible; although sometimes the outcome has not been entirely satisfactory. While fully acknowledging therefore that having a good public assistance scheme makes the introduction of a contributory scheme more complex, I don't think that structurally it rules out the successful development of a contributory scheme.

It is reasonable to assume that the benefits of a contributory scheme would go both to those not eligible for public assistance and to those who are members of families which are eligible. Indeed, it would be desirable that this should be so. As the Green Paper pointed out there can be circumstances in which the public assistance scheme is not able to assist a family badly hit by the long illness of a breadwinner because there are other breadwinners in the household whose earnings keep them just above public assistance level. These are the families which it is particularly desired to help with a contributory scheme. On the other hand, in other cases the benefit will go to some families who are already on public assistance, so reducing their need for public assistance. This is no bad thing. It reduces dependence on public assistance which is the more expensive scheme, administratively speaking; and it means that more money is thereby available for other improvements in the public assistance scheme.