Cancelling MPF Offset Timetable 'not Negotiable'

Labour and Welfare Secretary Law Chi-kwong says the government is determined to scrap the controversial MPF offsetting mechanism from 2022 but recognises the need to help employers adjust to the reform.

The planned law change will stop businesses from using their workers' MPF contributions to fund long-service and severance payments, although the goverment plans to earmark HK$17.2 billion to cushion the blow for businesses for the first 12 years after the reform.

Law says the plan is not final yet – but the administration hopes the Legislative Council can pass a bill on the matter in 2020 – so that the offsetting mechanism can end from 2022.

He added that the mechanism had to be removed "as soon as we can", but the government also had to bear employers in mind.

"Because of that change in policy, there is a moral obligation for the government to help employers to adjust gradually so that they can absorb the additional cost," Law said

The president of the Small and Medium Enterprises Association, Stephen Kwok, said Law should consider offering an extra subsidy for micro-enterprises because ten years after the mechanism is scrapped they would be struggling to survive.

Kwok said businesses with fewer than nine people are likely to suffer under the proposal.

However, Law said the government is not inclined to make funds available to employers with no time limit.

Critics worry that employers will decide to lay off staff during the first few years after the scrapping of the mechanism – because of the money that the government's put aside to cushion the reform.

But labour sector lawmaker Ho Kai-ming says that's not likely to happen, because it's costly to recruit new staff: