Allowance for the jobless can help them tide over in the short term

David Wong Yau-kar believes that unemployment insurance can be considered without affecting Mandatory Provident Fund contributions.

Introducing an allowance to help people who lose their jobs to help them tide over in the short term should be given consideration, says Mandatory Provident Fund Schemes Authority (MPFA) chief David Wong Yau-kar.

His proposal has initially drawn a positive response from Secretary for Labour and Welfare Matthew Cheung Kin-chung, who has not flatly ruled out such a plan.

However, Wong says he is not sure if the government will seriously consider his idea, and hopes some concrete details will emerge in the remaining 12 months of the current administration's tenure.

Pursuant to the current law, employers can offset severance and long-service payments to employees with their portion of MPF contributions, but employees are only allowed to receive either the severance pay or long-service payment, and not both.

"If a person is laid off, he desperately needs money for his basic living needs in the short term. If the person is granted an allowance good for two to three months, he can maintain his or her basic living needs without affecting the MPF account or triggering the offsetting mechanism," Wong says.

"The upper limit of the allowance that an employed person can receive on being made redundant may be capped at HK$25,000, or the equivalent of two to three months' pay."

Funds must be made available for such an allowance and the financial outlay for this is estimated to be around HK$1 billion a year. As to who will be responsible for such expenditure and if there's any vetting procedure needed, it's open to discussion, but Wong reckons that the government must play a part.

"The amount in question is not that big and the government can more than afford this," he adds. Although an allowance for the jobless is not included in Chief Executive Leung Chun-ying's election platform, Wong says such a move could help the government and society solve a growing social problem.

Wong notes that fellow Commission on Poverty member and social work academic Law Chi-kwong and Professor Lawrence Lau Juen-yee, former vice-chancellor of the Chinese University of Hong Kong, had previously raised matters quite similar to an allowance for the unemployed, and their proposals may be different.