TNAG-0789-FCO40-993-Development-of-social-policy-in-Hong-Kong-proposed-contribut-1978 — Page 12

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The existence of occupational benefit schemes, especially the more generous schemes which may or may not be non-contributory for their members, do present a bigger structural problem. are, however, ways of dealing with this problem. The contracting- out approach which is explored in the Green Paper is one option; and it is the approach

for good occupational pension schemes that the UK - and as it happens Japan which has deliberately follows the UK in this respect - have adopted. But it is by no means the only possibility; and it is probably the most complex (if fairest) option on offer. Other possible approaches, which are worth exploring, are suggested below (para 11-12).

The Hong Kong Government naturally pays close attention to the staffing and other administrative costs of social security developments, particularly as these may put a further strain on scarce staffing resources. It is worth noting, however, that the scheme sketched out in the Green Paper was in administrative terms at the more expensive end of the scale, since it incorporated a number of different features designed to produce a package which was fair to all concerned. But the best can be the enemy of the good, and whilst a number of these features may be desirable they are certainly not essential. Accordingly, there is scope for simplifying the scheme without detracting from its overall effectiveness. Some possible simplifications are dealt with below (para 11-12). The main point to be made at this stage is that in considering the possibility of a contributory scheme, too much weight should not be placed on the apparent administrative costs and complexity. Whilst there is inevitably a core of administrative complexity and expense that cannot be avoided, there is certainly scope for simplifying the proposals now on the table, which would reduce the administrative costs.

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Implications of current thinking

(a) Extended sick pay provision by employers

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There may well be room for doing more through employers and an alternative proposal to this effect is suggested below (para 14). But it does seem desirable before moving any further in this direction to look very carefully at the implications. The Green Paper examined the limitations on the use of occupational benefits as an alternative to social security provision (para 7.2-7.4). In particular it questioned whether it was realistic to expect employers to provide the same sort of guarantees to maintain the value of benefits that the Hong Kong Government has provided. also made the point that there is no precedent in any country for requiring employers to provide a full range of benefits without any state run alternative. Of course the latter arrangement is not proposed for Hong Kong. But before seeking to require employers to provide better sick pay it is worth bearing in mind the following points. First, my recollection is that a former Commissioner of Labour (Mr Price) did say in Legislative Council something along the lines that the Government did not envisage requiring employers to provide further occupational benefits such as statutory sick pay.

Secondly, while the better employers may be relied on to ensure that occupational benefits are properly and fairly administered, it must be doubtful whether it is reasonable to expect the same standard of administration from the small employers (80% of the total number) who employ about one-quarter of the Hong Kong workforce.