TNAG-1520-FCO40-2081-Employment-in-Hong-Kong-1986 — Page 37

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(d) A CPF would be

economically damaging. By

increasing labour costs, it would have an adverse effect on the viability of

individual firms and upon our international This would in turn hinder

competitiveness.

economic growth.

(e) Given that,

for

both employers and employees, the introduction of a CPF would result in additional outlays, the effect would be the same as an increase in taxes.

(f) There would be pressure upon Government to meet the administrative costs of a CPF and to 'top up' benefits if the

benefits if the rate of return achieved by the fund fell below expectations.

in

(g) A CPF, as a centralised compulsory savings

scheme, would not

fact encourage self-reliance but rather

discourage it by removing the individual's freedom of choice and obliging b im to rely upon state-organised fund. Hong Kong employees prefer to make their own choices.

the

a

(b) The creation of a CPF would discourage firms from operating their own provident funds,

introduction of which has been proceeding at a fast pace, and thus would promote state enterprise at the private enterprise.

expense of

(i) A CPF would be an institutional investor of enormous size and power. Its effects upon the financial market and upon the economy would be unsettling at best and dangerous at

worst.

(j) The existence of a large and convenient source of funds to meet Government borrowing would encourage a less responsible fiscal strategy.

(k) The benefits from the introduction of a CP F would be less than anticipated as many of the firms which would be required to participate in the CPF already operate their own staff provident funds.

UFFRENTIAL