Workers Hit Out At MPF Offset Mechanism 'inaction'

A workers' representative has warned that an expected wave of business shutdowns and layoffs as the result of an economic downturn could drain people's retirement funds as the government decided not to move ahead with the scrapping of the so-called MPF offsetting mechanism for the time being.

The business side, on the other hand, said it's time for a rethink of the proposal to get rid of the controversial mechanism because of the poor economy.

Management and labour agreed in principle two years ago that the MPF offsetting mechanism should be scrapped, and Bill Tang of the Federation of Trade Unions on Monday expressed disappointment with the government's announcement that it would not introduce an amendment bill relating to the matter to Legco until its next term.

Officials said more time is needed to study the issue.

Tang told the RTHK programme Millennium that MPF contributions worth HK$1.5 billion had already been used by companies to cover workers’ severance and long service payments in the first quarter of 2020 during the first Covid-19 outbreak.

He expects the figure to climb as more companies close down or lay off staff moving forward.

The MPF offsetting mechanism allows employers to use their contributions to cover workers’ severance and long service payments.

Tang said he is worried the government is under pressure from the business sector to keep the mechanism in place.

“After two years, we have not seen any actual process. The government has the responsibility to raise their amendment bill to Legco. The government’s recent response that they decided not to propose the bill this year is very disappointing,” he said.

The current term of the legislature has been extended by a year as the government postponed this year's Legco elections.

Business representatives welcomed the delay in scrapping the offsetting mechanism.

"I think at this economic situation, it's better to reconsider or delay the whole proposal," said Felix Chung, the leader of the Liberal Party.

He pointed out that the business sector is being hit hard by the coronavirus pandemic.

"There is already a consensus between the business sector and the labour unions that we agree to have this offset mechanism cancelled. But under the economic situation right now, the business sector is having a very tough time. We're talking about whether we can still survive or not, not thinking about whether we can afford that or not," he said.