TNAG-0789-FCO40-993-Development-of-social-policy-in-Hong-Kong-proposed-contribut-1978 — Page 4

CODE 18 - 77

NFIDENTIAL

Mr CortST PAPER,

H.K.G.D.

Ae

HONG KONG : SOCIAL SECURITY (5/

Reference

LA/HK/2

HRK 23H

RECLIVED IN REGSTEIRO. 5

12 DEC1973

ميرا

ΤΑ

Taw

DW CLE

1.

You minuted that you suspected that the arguments being adduced against a compulsory contributory sickness, death and retirement scheme in Hong Kong probably resemble those used against the National Insurance Act of 1911. They do. Lloyd George's scheme insured the whole working population against sickness, and workers in three industries - construction, ship- building and engineering against involuntary unemployment. Opposition to the compulsory and contributory scheme came from both the Conservatives and the Labour movement. The Conservatives were against intervention of the State and fought the measure on the ground that it was a monstrous oppression to make compulsory deductions from wages. The Labour Party was split with much of the leadership guided by the Fabian Society arguing that account should be taken of the workers' ability to pay, that those who could pay would already have insured themselves, and that the benefits offered were too small.

2. Lloyd George was able to carry the day by winning the support of the trade unions and the friendly societies which had been running their own sickness and unemployment schemes for their members. He gave them a major part in administering the money benefits of the scheme for their members and in doing so gave a major boost to trade union recruitment efforts. The doctors through the BMA were initially against the Act but it quickly became clear that most doctors would have a much enhanced income as a result of the legislation. Lloyd George conducted the campaign to sell the Bill with great energy and flair.

His central point was that contributors would be receiving 9d for 4d

4d being the employee contribution to which was 'added 3d from employers and 2d from the State per week. The Act was entirely Lloyd George's creation. The responsibility for the legislation should by rights have fallen to another Minister, Burns, but Lloyd George insisted that the Treasury should have responsibility and he hand-picked a team of civil servants under Mr Mourant to work out the scheme in detail.

3. There are some lessons in the 1911 Act for the position in Hong Kong at present. In the UK the strident opposition to the compulsory and contributory elements of the scheme quickly subsided and the scheme won the support of all sections of the community. When the next major step in extending social protection came in 1920 there was no question of changing the basis of the scheme established by Lloyd George.

4.

The coverage of the unemployed in 1911 was limited to three industries subject to seasonal fluctuation but by 1920 there was acceptance that all working men and women should be protected against the effects of involuntary unemployment. The 1920 Act was introduced in conditions of near full employment and prosperity and it was quickly swamped as a result of the recession which set in shortly afterwards. However, because the unemployment scheme was insurance-based and workers had built for themselves an

/entitlement to benefit

CONFIDENTIAL