Speech by SLW at Master's Degree Graduation Ceremony (English only)

     Following is the speech by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, at the Master's Degree Graduation Ceremony of the Faculty of Social Science of the Chinese University of Hong Kong (CUHK) today (December 2):

Professor Lee (Professor Paul Lee, Dean of Social Science of CUHK), Professor Wong (Professor Wong Wing-shing, Dean of the Graduate School of CUHK), distinguished guests, graduates, ladies and gentlemen,

     Good afternoon. I am pleased and honoured to address the graduating class of the Faculty of Social Science of the Chinese University of Hong Kong, which ranks among the top universities in Asia-Pacific.

     Let me first extend my warmest congratulations to all graduates. You all put in a lot of effort to earn your Master's degree. In the course of your academic pursuit, you sometimes had to burn the midnight oil, reprioritise your commitments and curtail your leisure time. Today is harvest time. You have made the right decision by equipping yourself with a Master's degree. Investing in oneself through higher education is a sure win. Knowledge is a personal wealth that no one can take away from you. In an increasingly knowledge-based, technology-driven, globalised and competitive environment, a postgraduate degree is a personal asset which adds value to the holder in terms of employability, career advancement and self-enhancement.

     As a small and open economy with 7 million people and few natural resources, Hong Kong must necessarily invest in the education of its people and, in particular, its workforce, if we are to stay competitive and thrive. A well-educated, hardworking, versatile and skilled workforce underpins a successful economy. This explains why education has always accounted for the lion's share of Hong Kong's recurrent government expenditure. At present, it stands at about 23 per cent. We see spending in education as long-term investment, not expenditure. Coming after education is social welfare, which takes up 17.4 per cent of recurrent government expenditure.

     As the Secretary for Labour and Welfare, I am acutely aware of the importance of the competitiveness, competence and flexibility of our workforce. To put it crudely, my portfolio is tied to the "rice bowl" - from promoting employment to helping those whose rice bowls have been broken or are in jeopardy. There is therefore a close interface between labour and welfare. Low unemployment upstream will mean less pressure on welfare support and more social harmony downstream. This Government is right in making the strategic decision of putting labour and welfare under the same policy bureau.

     Against this backdrop, I would like to give a pen picture of Hong Kong's current employment scene and take stock of what the present Government has done to help our grass-roots employees, the working poor, the disadvantaged and the growing elderly population.

     Let me begin with employment. On the whole, we have been faring generally well on the job front. Our latest unemployment rate (for August to October 2011) has edged up slightly from a nearly 14-year low of 3.2 per cent (which was close to full employment) to 3.3 per cent.

     However, with the deepening Euro zone debt crisis and the subdued economic growth in the United States (incidentally, the jobless rate in the United States stands at a stubbornly high 9 per cent), our economy will continue to be affected by the difficult global economic environment in the short term. Employers have turned cautious in hiring and the pace of local job creation has decelerated. That said, business activity is expected to increase in Hong Kong during the festive period around Christmas and the New Year. The continued strong domestic demand and inbound tourism plus the high pace of infrastructure investment should have a cushioning effect and ease the pressure on the unemployment rate. In fact, the number of private sector vacancies posted by the Labour Department has risen notably from an average of over 3,000 per working day to an all-time high of 4,000 to 5,000 per working day in the past three weeks. Notwithstanding this, we need to be vigilant and continue to closely monitor developments in the labour market. There is simply no room for complacency.

     Whilst on employment, it is pertinent for me to speak on the latest state of play of the Statutory Minimum Wage. I must say that the most important breakthrough of this Government in the labour policy area so far is the Statutory Minimum Wage. It is a key milestone in labour protection. It opens a new chapter in Hong Kong's social and economic history. Indeed, the Statutory Minimum Wage marks a major departure in the traditional mindset of the Government. It demonstrates that the Government is determined and ready to intervene in the market to improve the livelihood and protect the interest of our grass-roots citizens provided that Hong Kong's free-enterprise economy will not be compromised. This is a delicate and difficult balancing act. I believe that we have struck the right balance.

     Since its introduction on Labour Day (i.e. May 1) this year, the mandatory wage floor has been functioning smoothly. Thanks to Hong Kong's robust economic performance in the six consecutive quarters since 2010 and the co-operation and compliance of employers at large, the potential negative impact of the Statutory Minimum Wage on the labour market and business sentiment has been largely moderated. The overall labour market has largely held stable. The latest unemployment rate of 3.3 per cent is 0.2 percentage points lower than that in the pre-Statutory Minimum Wage period (February to April 2011).

     In fact, the initial Statutory Minimum Wage rate of $28 has brought about substantial improvement to the employment earnings of low-income workers. The average employment earnings of full-time low-income employees in the lowest decile rose by a notable 14.2 per cent in July to September 2011 on a year-on-year basis, or an increase of 6 per cent after discounting inflation, which far exceeded the overall wage increase of 8.8 per cent (which amounts to 2.2 per cent net of inflation).

     For those who are concerned about the well-being of low-income women workers, they should be pleased to hear that female employees stand out as the major beneficiaries of the Statutory Minimum Wage. The number of females in employment in the period August to October this year grew by 5.4 per cent over the same period last year. In particular, the number of females aged 50 and above in employment jumped by 11.7 per cent (or up by 36,800 persons). Also, the number of low-skilled female workers in employment increased by 41,900 persons. Of these, 12,100 were engaged in the retail sector.

     Despite these positive initial data, the overall actual impact of the Statutory Minimum Wage and whether there is any ripple effect can only be fully ascertained and objectively assessed through studies and surveys over a longer implementation period. We therefore need to closely monitor developments on various fronts.

     When the post-implementation wage distribution data become available in the first quarter next year, the Minimum Wage Commission will study and recommend the next Statutory Minimum Wage rate by adopting an evidence-based approach. It will take into account empirical data of related research and surveys, examine the impact of the Statutory Minimum Wage on the local economy, employment market and society, and conduct extensive consultations with various stakeholders. This ensures that the Statutory Minimum Wage rate can be discussed in a comprehensive, objective and balanced manner.

     Apart from the Statutory Minimum Wage, another new policy instrument aimed at helping the working poor and grass-roots employees is the Work Incentive Transport Subsidy Scheme (or WITS in short). WITS has a dual objective. First, it seeks to ease the financial burden of transport cost incurred for commuting to and from work for employed persons from low-income households. Second, it aims at promoting employment. WITS has started receiving applications since October 3 this year. As at end-November, some 20,000 applications have been received. Of these, more than 2,800 applications, involving about 3,000 applicants, have been approved and payment has been made. Of these, 83 per cent receive the full six-month payment of $3,600 or seven-month payment of $4,200. We will launch a full review of the scheme in three years' time and conduct a mid-term review one year after implementation. If circumstances warrant, we are prepared to advance the timing of the mid-term review.

     The Statutory Minimum Wage and WITS are twin measures in our policy toolbox to protect the interest of our grass-roots workers, ease working poverty, promote employment and encourage self-reliance.

     Turning briefly to social welfare, a few figures are worth noting. Government recurrent expenditure on social welfare rose from $20 billion in 1997-98 to $42.2 billion in the present financial year (2011-12), up by a significant $22.2 billion or 111 per cent. As I said in my preamble, government recurrent spending on social welfare accounts for a solid 17.4 per cent of the total government recurrent expenditure, ranking second among all policy areas. This underlines the Government's firm commitment to investing heavily in the development and provision of social welfare services.

     Having said this, I agree that there is still further room for enhancing our welfare services, in terms of both quality and quantity. Let me assure you that the Government will continue to invest substantially in social welfare and provide a sturdy safety net for our needy and disadvantaged. Indeed, the various major welfare initiatives for the elderly unveiled in the Chief Executive's 2011 Policy Address testify to our commitment and resolve in this respect. Three key measures are particularly noteworthy: first is the Public Transport Concessionary Fare Scheme for the Elderly and People with Disabilities (or better known as the $2 scheme); second is the Guangdong Scheme under which the Old Age Allowance will be provided to eligible Hong Kong elderly people who choose to reside in Guangdong; and finally, the pilot project on Community Care Voucher which will provide direct subsidy to elderly people who need long-term care, so that they can acquire a wide range of services which can help them "age in place". These three initiatives are all strategic, bold and visionary measures designed to meet the welfare needs and challenges of our fast-ageing population.

     While self-enhancement, self-enrichment or self-empowerment may be your motivation for the pursuit of a higher degree, these motives also underpin many government policies. The Statutory Minimum Wage aims to enhance the earning level of grass-roots workers, the $2 transportation concessionary scheme is designed to promote active ageing and enrich the community life of our senior citizens and persons with disabilities, while the Voucher Scheme seeks to empower the elderly with a better choice of community care services.

     You have earned your higher degree through determination, commitment and perseverance. Equally, it takes political courage, determination, conviction and commitment for the Government to launch groundbreaking new initiatives. Like you, we have a clear vision in investing for the future and reinforcing Hong Kong's position as Asia's world city.

     Let me conclude by saying that in building a truly caring, compassionate and cohesive Hong Kong, the Government cannot go it alone. We need the support, co-operation, understanding and input of all non-governmental organisations in the welfare field, the business sector, the academia and the community. Let us all join hands in achieving this goal.

     On this note, ladies and gentlemen, I warmly congratulate all graduates once again on your achievement and wish all of you the best of everything in the many years ahead.

     Thank you.

Ends/Friday, December 2, 2011
Issued at HKT 16:03