With Hong Kong's improving economy, applications for the Protection of Wages on Insolvency Fund last year fell 39% to 13,631, Permanent Secretary for Economic Development & Labour Matthew Cheung says.

Launching a seminar entitled Corporate Governance - the Latest Trend of Modern Enterprise Management today, Cheung Kin-chung said the fund recorded an average monthly surplus of $7.13 million in the first nine months of the 2004-05 financial year, and its present fiscal position is stable and healthy.

He said the fund's board estimates there will be an $81 million surplus at the end of 2004-05, the first since the Asian Financial Crisis in 1997.

Processing time cut

Through streamlining procedures and efficient deployment of resources, the average time for processing claims and delivery of ex-gratia payments was shortened from five weeks in 2003 to 4.1 weeks last year.

The fund provided a safety net for employees when the financial crisis triggered numerous closures. Employees owed wages by insolvent employers could obtain ex-gratia payments, helping keep harmonious relations and maintaining social stability.

The fund balance turning from deficit to surplus shows the business environment and the economy has improved.

Mr Cheung said though the number of fund applications dropped substantially, the Labour Department will continue to take a serious view on each application and guard against abuse.

He said harmonious labour relations are crucial for building a stable society. The successful rate of conciliation of labour disputes and claims handled by the Labour Department rose from 65.1% in 2003 to 67.3% last year, an all-time high since 1994.

It handled 28,666 labour disputes and claims last year, a substantial drop of 16% over 34,116 cases in 2003 and was the lowest level since 1998.

Governance, social responsibility complementary

Mr Cheung hopes today's seminar, attended by 350 trade union representatives, employers and human resources managers, will help enhance their understanding of good practices in corporate governance.

He said "corporate governance" and "corporate social responsibility" are complementary. "Corporate social responsibility" meant more than giving employees a reasonable level of benefits, but also concern about their training and the enterprise's role in the community.

He said fulfilling social obligations will not hinder the operation of the business. On the contrary, it will help build a corporate image and a sense of belonging among employees, which will in turn facilitate business growth.