CONFIDENTIAL
(a)
(b)
(c)
(a)
A voluntary scheme would add considerably to the
administrative complexities of a contributory
social insurance scheme. For this reason, GAD
has expressed a preference for a compulsory scheme.
The voluntary element would make it difficult to
estimate with any accuracy income from
contributions and hence to set benefits at the
right level from the outset. GAD's advice is that
the scheme would tend to attract the older less
healthy members of the workforce for whom the chance
of claiming benefit is greater than for younger
people. If this were so, the scheme would not be
successful in attracting support from many young
employees who ought to be covered for benefit
and for whom the scheme was also designed.
Because of the uncertainty mentioned at (b),
contributions would probably need to be set at a
higher level than in a fully compulsory scheme
to ensure a reasonable spread of benefits.
Employers, trade union representatives and social
workers have commented on the possibility of
discriminatory employment practices resulting from
a scheme where an employee could commit his
employer to the additional cost of contributing
to a social insurance scheme. Such practices
would be difficult to prevent in practice because
proof would be hard to come by. They would tend
to restrict mobility of labour which is vital to
Hong Kong's economy.
CONFIDENTIAL
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