The number of applications for the Protection of Wages on Insolvency Fund are expected to remain at a high level for several months.

Permanent Secretary for Economic Development & Labour Matthew Cheung said as SARS has dealt a heavy blow to sectors such as catering, retail, hotel and tourism, entertainment and consumer services, there will naturally be a "knock-on effect" on the fund.

So it is important to maintain the financial viability of the fund so that it can continue to function "as a safety valve in keeping our industrial and social harmony".

Mr Cheung was speaking at a luncheon seminar for the Insolvency Interest Group of the Hong Kong Society of Accountants.

Last year, the fund received 23,023 applications and paid out $514 million, both record high figures.

The number of applications and the amount of ex-gratia payments have more than doubled since the Asian financial crisis, from 10,550 ($236 million) in 1997 to 23,023 ($514 million) in 2002.

The number of applications received in the first five months of this year has shown a slight upward trend, with 8,819 applications received - an increase of 6.7% over the same period last year.

Most of the applications came from the catering trade and construction industry, he said.

Committed to tackling abuse

Mr Cheung said the Government took a serious view on any possible abuse of the fund, particularly with employers dishonestly shifting their liabilities on wage payments to the fund.

"The fund thus plays the vital role of a safety net in providing relief to needy and aggrieved workers, in defusing confrontation on the labour scene and maintaining Hong Kong's industrial harmony."

Measures in addition to the current stringent vetting procedures to have been adopted to safeguard the fund, include:

* The setting up of a task force comprising representatives of the Labour Department, the Official Receiver's Office, the Legal Aid Department and the Police Commercial Crime Bureau to combat possible abuse of the fund;

* The stepping up enforcement against employers committing wage offences;

* Stepped-up publicity and public education, together with closer monitoring of major insolvency cases; and,

* More active involvement of the Labour Department in the liquidation process.

With the setting up of the Employment Claims Investigation Unit, 147 summonses relating to wage offences were heard in the first four months of 2003. Of these, 134 summonses or 90% resulted in convictions. This represents an increase of 123% over the same period last year.

Improving job & re-training opportunities

Mr Cheung said the Government is also committed to tackling unemployment.

Measures included the formation of a high-level task force chaired by the Financial Secretary, a number of job-creation initiatives, tailor-made pre-employment and on-the-job training programmes for youngsters to improve their employability, and special relief measures to boost the economy and improve the business environment.

Schemes that help ease the unemployment situation include:

* Employees Retraining Scheme - Over 200 retraining courses providing some 110,000 training places with an annual Government subvention of about $400 million are being offered through a network of over 50 training bodies;

* A $11.8 billion relief package to help the community tide over the present difficulties and revive the economy, which included about $432 million for creating jobs for about 21,500 people; and,