Speech by SLW at Classified Post HR Conference (English only)

     Following is the speech by the Secretary for Labour and Welfare, Mr Stephen Sui, at the Classified Post HR Conference on "Compensation and Benefits: Redefining HR Thinking" today (March 29):

Mr Gary Liu (Chief Executive Officer, South China Morning Post Publishers Limited), Mr Alex Ho (General Manager, Education, Recruitment, Circulation and Syndication, South China Morning Post Publishers Limited), distinguished speakers and guests, ladies and gentlemen,

     It gives me great pleasure to kick-start this high-level human resource (HR) conference which aims at redefining HR thinking, in particular in renewing our concepts of compensation and benefits.

     Let me thank today's host, the Classified Post, for bringing together an impressive line-up of expert speakers to bring to us fresh insights on issues surrounding compensation and benefits. My appreciation also goes to all the sponsoring and supporting partners for forging a dynamic and strategic platform through which business leaders, corporate executives and human resources professionals can gather new thoughts and insights on human capital management.

     Mr Bill Gates once said, "Take our 20 best people away, and I will tell you that Microsoft will become an unimportant company." An organisation, no matter how well designed and managed, is only as good as the people who work in it. This is particularly true in today's business world, which is largely propelled by knowledge and innovation. In Hong Kong's context, the labour shortage is acute and competition for talents is intense, making staff recruitment and retention the key challenges faced by employers today and in the years to come. It is important for employers to devise robust human capital strategies to attract, nurture and retain competent and committed employees. That is why HR experts who know how to lure and groom talents, how to incentivise them for better performance and how to retain them for sustainable corporate development, have been and should be increasingly coming to the forefront, to take the lead as corporate strategists and advisors.

     The new HR thinking requires corporates to go beyond the mere administrative functions of HR and fully unleash their positive strategic impacts on the organisations' competitiveness and long-term health. It is high time for the myth and the misplaced dichotomy of the "results-versus-people" mentality, which separates financial results from the people management philosophy and practice, to be replaced by one that goes back to regarding talent management as the core part of the business and the ultimate winning strategy for companies and organisations. We need to be people-oriented and employee-friendly.

     At the heart of my proposed paradigm shift in HR thinking is to change from a mechanistic and simplistic assumption of employees to an organic, dynamic, comprehensive and heterogeneous view. Under the knowledge and innovation based economy, employees are doing fewer and fewer purely mechanical and repetitive tasks. Employees' "value creation" comes more and more from personal connections, imagination and innovation. That is why we need to rethink the traditional paradigm for seeing people in a simplistic mechanical way, in terms of their "skills" or "functions". The individuality and idiosyncrasies of employees and different employees groups such as the need for employees with small children to have more flexibility in their work schedule and work location, the needs for the generations X, Y and Z to be recognised for their innovation and creativity must be taken into consideration in talent management, so that employees' productive and innovative energies can be better unleashed.

     When put in terms of compensation and benefits (C & B) packages, an organic and dynamic view of employees means that we must pay attention not just to direct financial benefits (e.g. wages, salary, bonuses and commissions), but also to the indirect rewards (e.g. leave, retirement plans and education opportunities) and non-financial or intangible benefits (career development opportunities, opportunities for recognition, a more employee-friendly work environment and corporate culture) offered to employees in return for their contributions to the organisation. In fact, non-financial rewards such as cultivating a strong sense of belonging to the company, giving employees flexibility and autonomy, etc, play an important role in staff retention and long-term talent engagement.

     In the organic and non-mechanistic view of HR thinking, employees' well-understood personal and social needs ought to be given due considerations in the C & B packages. In fact, the corporate world is filled with good practices of employers promoting a people-oriented culture and better work-life-balance for their staff members. These may include such employee-friendly initiatives as extended maternity and paternity leave, grandparent leave, working from home, flexible time, part time or even job sharing.

     To encourage female participation in the labour force and to assist working parents better balance their job and family demands, the Hong Kong Special Administrative Region (HKSAR) Government has been stepping up efforts in enhancing child care, elderly care, after-school support services and retraining courses targeting the needs of women and offering more female homemakers and caregivers the flexibility of returning to work. To allow fathers of newborns more time to attend to their wives and other family needs arising from childbirth, we introduced statutory three-day paid paternity leave for eligible fathers in February 2015. Moreover, the Labour Department has, as a facilitator, been promoting the importance and wider adoption of friendly employment practices for families and mature persons. The Labour Department will also conduct awareness-building exercises with employers and labour unions to gradually instil a family-friendly culture in the workforce.

     Not all companies will do as Google does to hire people whose only job is to keep employees happy and productive. But we can all learn from Google's example on how perks such as free chef-prepared organic meals, free haircuts, subsidised massages, nap pods, video games, ping-pong, and death benefits for the "better half" can help foster a strong sense of belonging, and a happy and productive corporate culture.

     Earlier this month (i.e. March 21, 2017), I officiated at the opening of the Airport Preschool, which is the fourth corporate-affiliated facility in Hong Kong providing care and early education services for children under the age of three. Indeed, this commendable initiative of the Airport Authority Hong Kong serves as a shining example of corporate social citizenship that fosters a family-friendly work environment for the airport community. To reinforce this strategic direction, the Government is exploring the feasibility of providing 100 non-governmental organisation (NGO)-operated child care places for staff members in the proposed Government Complex in Tseung Kwan O, encouraging NGOs to set up similar facilities in their redevelopment projects and taking forward a consultancy study on the overall development of child care services.

     Another classic example I came across is a local media news team that allows news reporters to take turns in taking non-paid study leave and working holiday leave. Quite a few Gen Y and Z employees of that company told me how they were able to apply many of the things they learnt during the non-paid holidays to enrich their work. They also tend to develop a sense of loyalty to the company. To provide an opportunity for our young people to gain first-hand experience living and working in a foreign culture, the Hong Kong Government has been fostering bilateral Working Holiday Scheme arrangements with other economies. So far, we have such arrangements with 11 economies, namely New Zealand, Australia, Ireland, Germany, Japan, Canada, Korea, France, the United Kingdom, Austria and Hungary. Since its establishment in 2001, around 78 000 Hong Kong youths have participated in the working holiday arrangement, making it a highly popular scheme for our young people.

     I am very pleased to know that today's expert speakers will also cover important and inspiring topics, such as how to use C & B packages to motivate employees, how employees' expectations toward work may have changed as the robo-gig economy emerges, and how C & B components such as Mandatory Provident Fund, medical packages and company culture play a role in incentivising employees.

     Ladies and gentlemen, the advent of a global ageing trend has also put employees in a more central position as the life blood of an enterprise. According to the United Nations, globally one in eight people was aged 60 years or over in 2015. This figure will rise to one in six in 2030 and one in five in 2050. In Hong Kong, out of our current population of 7.3 million, 1.17 million are aged 65 and above. This translates into one in slightly over six of the population and the ratio will soar to one in three in 20 years' time. Global population ageing makes it imperative for companies, institutions and governments alike to redefine their human resource strategies.

     For governments around the world, population ageing requires them to come up with new human capital development strategies. Hong Kong is no exception. In face of the dual challenges of a rapidly ageing population and a shrinking workforce, the HKSAR Government has left no stone unturned in building a versatile, productive and competitive workforce so that our economy can continue to thrive in the competitive global environment. In January 2015, we mapped out holistic, comprehensive and visionary population strategies covering some 50 initiatives in order to promote this dynamic city's sustainable economic and social growth, unleash the potential of the local workforce, enhance the quality of home-grown talent, attract foreign investors and talent, foster a family-friendly environment and embrace new opportunities in an ageing society.

     Our top priority has always been to nurture local talent and make the best use of our own people. Between 2012-13 and 2017-18, recurrent expenditure on education has recorded cumulative growth of nearly 30 per cent to $78.6 billion, accounting for 21 per cent of government recurrent expenditure, with an average annual growth of about 5.4 per cent. This is the lion's share of all policy areas and it speaks volumes about the Government's commitment to invest in the future of our next generation. Indeed, we see education spending as a long-term investment rather than expenditure, and rightly so as human resources are Hong Kong's most valuable asset.

     To enhance the employability and overall competitiveness of different sectors of the local workforce, the Government injected HK$15 billion into the Employees Retraining Fund in early 2014 to finance the long-term operation of the Employees Retraining Board. We have also established a HK$1 billion fund to provide long-term support for the development of the Qualifications Framework, which seeks to promote lifelong learning and skills upgrading.

     The Continuing Education Fund (CEF) subsidises adults with learning aspirations to pursue continuing education and training. So far, injections into the CEF have totaled $6.2 billion. The Government plans to inject an additional $1.5 billion into the Fund in 2017-18. We will also consider various measures to enhance the operation of the CEF. In addition, we will raise the tax deduction ceiling for self-education expenses from $80,000 to $100,000, with a view to promoting lifelong learning and maintaining a quality workforce.

     The Hong Kong Government will spare no efforts in facilitating, enabling and attracting women, the "young old", new arrivals, ethnic minorities and persons with disabilities to join or rejoin the workforce. We invite all our human resources experts to join hands with us to build a versatile and diverse workforce for Hong Kong.

     Ladies and gentlemen, we are living in exciting and challenging but uncertain times. With constant and sometimes unpredictable economic, social, demographic and even political changes, we cannot afford to sit on our hands. As business leaders, human resource executives and policy makers, we must remain vigilant and stand ready to rise to the challenges and turn adversities into opportunities. We must go beyond the conventional silo mentality and proactively create values for people, organisations and the community as a whole. We must be prepared to think out of the box and have the courage to make a paradigm shift. Transformation to meet today's needs defines the success of tomorrow. After all, life is just like riding a bicycle. To keep our balance, we must keep moving. On this note, let me wish you all a fruitful and inspiring conference. Thank you.

Ends/Wednesday, March 29, 2017
Issued at HKT 15:30