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As Hong Kong's economy continues to improve, the number of applications for the Protection of Wages on Insolvency Fund (PWIF) decreased from 22,350 in 2003 to 13,631 in 2004, a substantial drop of 39%.

Addressing the opening ceremony of a seminar entitled "Corporate Governance - the Latest Trend of Modern Enterprise Management" today (January 25), the Permanent Secretary for Economic Development and Labour, Mr Matthew Cheung Kin-chung, noted that the present financial position of PWIF was stable and healthy. The fund recorded an average monthly surplus of $7.13 million in the first nine months of the financial year 2004-05, April - December of 2004.

"The PWIF Board estimates that the fund will register a surplus of $81 million at the end of 2004-05. This will be the first financial year that the fund records a surplus since the Asian financial crisis in 1997.

"Through streamlining procedures and efficient deployment of resources, the average time for processing PWIF claims and delivery of ex-gratia payments was also shortened from five weeks in 2003 to 4.1 weeks in 2004.

"While the Asian financial crisis in 1997 triggered numerous closure of business, the PWIF provided a safety net for the employees. The employees could obtain ex-gratia payments if they were owed wages by their insolvent employers. This helps keep harmonious relations between employers and employees, thereby maintaining social stability," Mr Cheung said.

The fact that the balance of PWIF turned from a deficit into a surplus indicated that the business environment and the economy had improved, he said.

"Though the number of applications for PWIF has dropped substantially, the Labour Department would continue to take a serious view on each application and guard against abuse of the fund by all means," Mr Cheung stressed.

He said that harmonious labour relations were crucial for building a stable society. "The successful rate of conciliation of labour disputes and claims handled by the Labour Relations Division (LRD) of the Labour Department went up from 65.1% in 2003 to 67.3% last year, an all-time high since 1994.

"In 2004, the LRD handled 28,666 labour disputes and claims, a substantial drop of 16% over 34,116 cases in 2003. It was the lowest level since 1998," he said.

Mr Cheung hoped today's seminar would help participants enhance their understanding of good practices in corporate governance, adding that improper corporate governance may lead to serious consequences such as financial difficulties and even criminal charges.

He said that "corporate governance" and "corporate social responsibility" are complementary. "Corporate social responsibility" meant an enterprise would not only give employees a reasonable level of benefits, but would also show concern about employees' training and the role of the enterprise in the community.

Fulfilling social obligations would not hinder the operation of the business. On the contrary, it would help build up a corporate image and a sense of belonging among employees, and this would in turn facilitate the growth of business, Mr Cheung said.

The seminar was jointly organised by the Labour Department and the PWIF Board. About 350 trade union representatives, employers and human resources managers attended the seminar. The chairman of the PWIF Board, Mr Ho Sai-chu, also officiated at the opening ceremony.

Company Secretary and Head of Corporate Services Division of Hysan Development Company Limited, Ms Wendy Yung, took part in the seminar and talked about good practices in corporate governance. Management Consultant, Mr Yeung Kwok-ki, gave a talk on the key to business success. Senior Superintendent of the Commercial Crime Bureau of the Police Force, Mr Armond Chan, shared his experience in fighting commercial crimes involving employers, company directors and shareholders.

Ends/Tuesday, January 25, 2005

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