About $26 million is being sought by Government to launch the Graduate Employment Training Scheme in August or September.

Permanent Secretary for Economic Development & Labour KC Cheung said the funds will be sought in the Legislative Council on May 16.

Mr Cheung said the scheme is meant to encourage companies to employ graduates and provide on-the-job training.

Such employers will be paid a monthly training allowance of $2,000 for up to six months for each graduate engaged. Mr Cheung expected about 2,000 graduates to benefit from the scheme.

Given the persistently high unemployment rate, civil service recruitment freeze and the continued economic downturn, Mr Cheung said university graduates will encounter greater difficulty in securing their first job this year.

In the highly competitive labour market, many employers also tend to prefer experienced candidates to fresh graduates when recruiting staff.

"To enable fresh graduates to gain working experience and to improve their job-related skills thereby enhancing their employability, we need to introduce a special employment programme for them," Mr Cheung said.

Hong Kong residents holding bachelor degrees awarded in 2003-04 will be eligible to join the Scheme.

Past graduates receiving their bachelor degrees in the last two years can also in exceptional cases be allowed to join the scheme.

Training vacancies will come from the private sector. Employers joining the scheme will need to draw up training plans for their trainees and provide them with suitable training during the employment period.

They are required to pay the trainees' wages at market rates. In addition, employers must undertake not to displace existing employees with the trainees.

Employers are also encouraged to offer long-term employment to the graduate trainees upon the latter's satisfactory completion of training.

The Labour Department will oversee the overall operation of the scheme and work closely with the universities.

It will put in place a monitoring mechanism to prevent abuses by employers. Employers found abusing the scheme will be disqualified from receiving the training allowance.