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Speech by SLW at SCMP Classified Post/Hewitt Best Employers in HK 2009 Conference (English only)

     Following is the keynote speech by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, at the South China Morning Post (SCMP) Classified Post/Hewitt Best Employers in Hong Kong 2009 Conference today (May 25):

CK (Mr CK Lau, Editor, SCMP), Mr Wixon (Mr Philip Wixon, Consulting Leader, Hewitt Associates), Mr Chan (Mr Ernest Chan, Chief Commercial Officer, Convoy Financial Services Limited), distinguished guests, ladies and gentlemen,

     It gives me great pleasure to address the SCMP Classified Post/Hewitt Best Employers in Hong Kong 2009 Conference.  

     Let me first congratulate very warmly all the winning best employers.  Your exemplary practices set shining examples for others to follow.  This year's conference certainly carries a special meaning when corporations are striving to rise above the challenges brought about by the global financial tsunami.  The theme "Staying Strong - How Best Employers Manage in the Downturn" is therefore both timely and thought-provoking.

The employment market and labour relations scene

     No one can confidently predict how long the current economic downswing will last or how deep it will go.  The World Trade Organisation predicts that global trade will plunge by 9% in 2009, representing the steepest drop since the Second World War.  The Organisation for Economic Cooperation and Development (OECD) forecasts that the Gross Domestic Product (GDP) in the OECD area will drop by 4.3%.  There appears to be a consensus that the financial tsunami will bring long lasting changes to the world economy and possibly the employment landscape.

     The global financial crisis and the ensuing economic recession continue to weigh heavily on Hong Kong's economy.  For the first quarter of 2009, the value of our total exports of goods dropped by about 22% over the same period in 2008 - the worst in 50 years.  The value of imports of goods decreased by an equally alarming level of about 23%.   Following a contraction of 2.6% in the fourth quarter of 2008, our GDP registered a sharp year-on-year decline of 7.8% in real terms in the first quarter of 2009.  This marked the largest decline since the third quarter of 1998 when our economy was severely battered by the Asian financial crisis.

     Whilst firms were actively considering measures to recruit and retain staff during this time last year, the rapid deterioration in the business landscape has, as expected, led to a quick rise in the local unemployment rate.  The latest figure edged up to 5.3%.  This compared with the 10-year low of 3.2% in mid-2008.  Whilst there are signs that the rise in unemployment is tapering off, with the pace of job loss slowing down from a monthly average of 15,600 in January and February this year to 5,500 in March and April, labour market conditions remain slack.  The unemployment rate is likely to be high in the near term.  The human swine influenza has also emerged as a new source of uncertainty and pressure on the labour market.  Of course, we are not alone on this score.  The latest jobless rate of the United States, for example, stood at 8.9%.  

     On the labour relations front, as a result of the collective efforts of both employers and employees, Hong Kong has been blessed with harmonious labour relations.  As a matter of fact, industrial peace has underpinned our economic and social stability over the past decades of sustained economic growth.  In 2008, the number of labour disputes  conciliated by the Labour Department were 120, down 3% on 2007.  It was the lowest level since 1998.  The number of working days lost per thousand salaried employees and wage earners as a result of labour disputes and industrial action in 2008 was 0.46, which was among the lowest in the world.

     The situation has, however, changed dramatically since last September when a series of business closures, insolvencies and redundancies began to surface as a result of the economic recession.  In the first four months of this year, the number of labour disputes handled by the Labour Department were 59, up a hefty 84% over the same period last year.  Despite the surge in the number of cases handled, the number of working days lost per thousand employees was only 0.27.

Employees - the most valuable asset

     I am sure that all of you, as experts and seasoned practitioners in people management, would agree that employees are the most valuable asset of an enterprise.  Indeed, Hong Kong, with few natural resources to begin with, has thrived on the human factor.  A hard-working, dedicated, resilient and conscientious workforce and our "can-do" spirit underpin our present-day success.  Enterprises rely on the co-operation and support of employees to respond quickly and effectively to changes.  Employees play a key role in helping a company to out-compete competitors in good times.  They are also instrumental in determining whether a firm can stay afloat during rough rides.  Hence, having a people-oriented mindset and good people management skills would be as important as offering reasonable remuneration packages in attracting, nurturing, motivating and retaining talent.  

     Of course, when firms are struggling for survival and the business outlook is uncertain, to be a caring employer may well be a tall order and easier said than done.  But I trust that some fundamental values would outlast whatever adversities we are now facing.  A people-oriented enterprise should possess three essential qualities, come rain or shine.  First, enterprises should promote communication and co-operation amongst staff through "empathy", with the objective of building a quality team.  Second, employers should show "care" in identifying the needs of employees and their families and provide them with a worry-free work environment.  Third, employers should listen to employees' views with "patience" and proactively transform them into effective measures.  Noting the "sincerity" of the employers, employees will work with "willingness" and enhance the productivity of the enterprise.  This will lead to a win-win situation.

Family-friendly Employment Practices

     At the centre of a people-oriented mindset in the workplace are family-friendly employment practices.  Cherishing the family has always been a core value of our community and ranks high on the Government's agenda.  Financial crisis or not, family harmony is the foundation of social harmony.  Employees have families and they all have different family roles to play.  There are bound to be times when our family, personal or work commitments compete with each other.  A family-friendly workplace and a considerate employer would thus help the staff strike a proper balance amongst all these responsibilities.  This would surely be conducive to motivating an employee to give his or her best and instilling a sense of belonging to the enterprise.

     There are different measures, such as "flexi work" arrangements and special leave, which can help employees achieve a work-life balance.  The Labour Department has been promoting and will continue to promote family-friendly employment practices through organising Human Resources Managers' Clubs, seminars and other promotional activities.  It will also continue to seek partnership and share good practices with the business community and social service agencies to create a family-friendly workplace.  

     As the largest employer in Hong Kong with a workforce of well over 160,000, the Government has implemented a five-day week since July 2007.  We are pleased to see that there has been no loss of productivity, nor any additional expenditure incurred since the introduction of the arrangement.  On the contrary, there has been an obvious improvement in staff morale and motivation.  I hope that more private enterprises will follow the government's lead.

     In the competitive commercial world, the pursuit of profit is a prime and legitimate objective of all private enterprises, especially listed companies.  This is perfectly understandable.  Indeed, the famous economist and Nobel laureate, Dr Milton Friedman, once said that "the business of business is business".  Whilst not disputing the point that a company is accountable to its shareholders, I must say that it has also a responsibility to its stakeholders in the wider community.  After all, a company is a living entity.  All that needs to turn a company into a caring and responsible social citizen is a touch of compassion, humanity, empathy, flexibility and fairness.

     Last Wednesday (May 20), I attended and spoke at a four-hour debate in the Legislative Council on a motion urging the Government to create a favourable environment to enable enterprises to fulfill their corporate social responsibility.  In face of the prevailing difficult economic climate, the Government has indeed been leaving no stone unturned in stabilising the financial market, supporting enterprises and preserving employment.  Over 8,000 applications involving a loan amount of some $15.1 billion have been approved so far under the $100-billion Special Loan Guarantee Scheme for small and medium enterprises and helped preserve 130,000 jobs in the process.  We are stepping up our efforts to create employment and training opportunities on all fronts.  In this respect, we will be speeding up our infrastructural and works projects, big or small.  For every job counts.  And behind each job stands a family: it goes without saying that job security underpins family harmony and social stability.  In the light of the deepening impact of the economic recession, the Government will roll out a further round of economic relief and stimulus measures very shortly, on top of the package announced in the recent Budget.

     Before I conclude, I would like to touch on the issue of minimum wage, which has a bearing on corporate social responsibility.  As you may be aware, the Government has decided to legislate for an across-the-board minimum wage and plans to introduce a bill into the Legislative Council in seven weeks' time.  If everything goes well, a statutory minimum wage will come into force by end-2010 or early 2011 at the earliest.  In deciding to go down the route of a mandatory wage floor, we are conscious of the fact that flexibility of wages and prices is crucial to Hong Kong's competitiveness and resilience to external shocks, given the high degree of external orientation of our economy and the linked exchange rate system.  Nevertheless, we are convinced that safeguarding the interests of the vulnerable and enhancing social harmony are equally important social policy objectives.

     In formulating the initial minimum wage rate, we will strike a proper balance between three key factors.  First, to forestall excessively low wages; second to minimise the loss of low-paid jobs; and third to sustain Hong Kong's economic growth and competitiveness.  We will adopt an evidence-based approach and maintain a sense of proportion as well as a strong dose of prudence in charting our way forward.  I must say that with employer groups, chambers of commerce and employers at large embracing increasingly the concept of corporate social responsibility in recent years, there has been a distinct culture change in Hong Kong conducive to the introduction of a minimum wage.  In fact, I am deeply appreciative of the understanding and co-operation of many major players in the business community, without which we would never have reached a consensus and breakthrough on this important and long-standing issue.  

     On this note, ladies and gentlemen, I congratulate SCMP Classified Post and Hewitt very warmly once again on staging this prestigious conference.  I am sure that you will all come away far better equipped and much wiser.  Thank you.

Ends/Monday, May 25, 2009
Issued at HKT 11:20


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