*********************************************************

The Government has adopted a multi-pronged strategy in tackling unemployment and abuse of the Protection of Wages on Insolvency Fund (PWIF), the Insolvency Interest Group of the Hong Kong Society of Accountants was told today (June 9).

Speaking at a luncheon seminar for the society, the Permanent Secretary for Economic Development and Labour (Labour), Mr Matthew Cheung Kin-chung, said that Hong Kong was going through tough times, with stubbornly high unemployment and protracted deflation.

Although the real solution lay in the overall revival of the local economy, it was incumbent on the Government to do everything within its power to ease the unemployment situation, Mr Cheung said.

"We are adopting a multi-pronged strategy and grasping every job opportunity for the unemployed. We are leaving no stone unturned."

Measures included the formation of a high-level task force chaired by the Financial Secretary, a number of job-creation initiatives, tailor-made pre-employment and on-the-job training programmes for youngsters to improve their employability, as well as special relief measures to boost the economy and improve the business environment.

To cater for the retraining needs of middle-aged workers and job seekers, focused retraining opportunities are provided under the Employees Retraining Scheme. More than 200 retraining courses providing some 110,000 training places with an annual Government subvention of about $400 million are being offered through a network of over 50 training bodies.

"To ease the economic pain inflicted by Severe Acute Respiratory Syndrome, the Government has launched a package of relief measures costing $11.8 billion to help the community tide over the present difficulties and revive the economy. Within the package are five job-creation and training initiatives costing about $432 million. Together they will benefit about 21,500 people," Mr Cheung said.

The Labour Department is also running three new programmes at a total cost of $100 million to assist some 15,500 job seekers to secure employment. These programmes are the Re-employment Training Programme and the District Employment Programme (both for the middle-aged), and the Graduate Employment Training Scheme for fresh university graduates.

Turning to the PWIF, Mr Cheung said the fund was pivotal in maintaining Hong Kong's harmonious labour relations and social stability in that speedy financial relief was provided to employees whose employers had become insolvent.

"The PWIF thus plays the vital role of a safety net in providing relief to needy and aggrieved workers, in defusing confrontation on the labour scene and maintaining Hong Kong's industrial harmony.

"Last year, the PWIF received 23,023 applications and paid out $514 million, both record high figures. In fact, the number of applications received by the fund and the amount of ex-gratia payments have more than doubled since the Asian financial crisis: from 10,550 in 1997 to 23,023 in 2002, and from $236 million to $514 million."

The number of applications received in the first five months of this year has shown a slight upward trend, with 8,819 applications received -- an increase of 6.7% over the same period last year. Most of the applications came from the catering trade and construction industry, Mr Cheung said.

"For the months to come, we expect the number of applications to remain at a high level. Severe Acute Respiratory Syndrome has dealt a heavy body blow to some sectors of the local economy. The sectors hardest hit include catering, retail, hotel and tourism, entertainment and consumer services. This will naturally have a knock-on effect on the PWIF," he continued.

"It is therefore all the more important for us to maintain the financial viability of the fund so that it can continue to function as a safety valve in keeping our industrial and social harmony," he said.

Mr Cheung stressed that the Government took a serious view on any possible abuse of the fund, particularly with employers dishonestly shifting their liabilities on wage payments to the fund. Measures in addition to the current stringent vetting procedures had been adopted to safeguard the fund.

"A task force comprising representatives of the Labour Department, the Official Receiver's Office (ORO), the Legal Aid Department and the Commercial Crime Bureau (CCB) of the Police has been set up to combat possible abuse of the fund.

"The task force collects intelligence on suspected fraudulent acts committed by employers and directors in the course of a company's winding up or bankruptcy; investigates proactively allegations of fraud, theft and conspiracy to defraud; and initiates prosecution against employers, directors and employees on cases where there is prima facie evidence of suspected offences."

"At present, the CCB and the ORO are closely investigating 22 cases referred by the Labour Department. In fact, since the formation of the task force, the CCB has arrested two directors and 11 ex-employees involved in one of the cases and has taken out a prosecution in another case against three persons who had colluded to defraud the fund," he said.

In tandem with the more stringent policing of the fund, the Labour Department has stepped up enforcement against employers committing wage offences.

With the setting up of the Employment Claims Investigation Unit, 147 summonses relating to wage offences were heard in the first four months of 2003. Of these, 134 summonses or 90% resulted in convictions. This represents an increase of 123% over the same period last year.

Mr Cheung also noted that stepped-up publicity and public education, together with closer monitoring of major insolvency cases, more active involvement of the Labour Department in the liquidation process and the co-operation of insolvency practitioners and experts would enhance the integrity of the fund and combat any possible abuse.

End/Monday, June 9, 2003

NNNN