TNAG-1520-FCO40-2081-Employment-in-Hong-Kong-1986 — Page 36

CONFIDENTLI

4

security strategy

(c) A contributory scheme would be in accordance

with the existing social security of assisting those least able to themselves, while otherwise encouraging self-reliance.

social

help

and

(d) Because benefits under a CP F system are directly linked to contributions, employees would be less likely to press for ever-increasing

welfare employment benefits than under the present system where such benefits are paid for by Government or by the employer.

(e) A

which

provided

for

benefits

CP F

full transferability

of

should facilitate labour mobility, whereas benefits linked to length of service with a single employer tend to discourage it.

(f) A CPF would make available a substantial source of funds to meet Government borrowing if required.

Arguments against a CPF

11.

A range of contrary arguments has also been advanced. The main weakness of a CPF as a solution to the problem of old age is that, because benefits depend on contributions, those in greatest need tend to receive the least benefits. A CPF scheme would confer the greatest level of benefit upon those who have enjoyed regular employment, have contributed over a long period of years and have earned a reasonably high wage. In greatest need, however, are those who in contrast have been

been unable to work, have worked only irregularly or have received a low wage. A CPF would be of little benefit to

to such people. Other arguments advanced against a CPF are:

(a) Hong Kong already has a substantial framework of social provision which makes a CPF unnecessary.

(b) Because it would do little to help those in greatest need, a CPF would not significantly reduce the volume of claims under existing social security arrangements.

(c) A CPF would reduce employees' take-home pay, lowering standards of living and leading to pressure for pay increases (with further adverse effects on firms).

CONFIDENTIAL