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At the Legislative Council Meeting Resumed Debate on the 2001 Appropriation Bill

PLEASE CHECK AGAINST DELIVERY Speech by Mrs Fanny Law Secretary for Education and Manpower at the Legislative Council Meeting on Wednesday, 4 April, 2001 Resumed Debate on the 2001 Appropriation Bill

Madam President,

Regarding the 2001-02 Budget, I would like to thank Members for their constructive comments and valuable views on education and employment. Now I am going to address Member's main areas of concern.

2. Developing Hong Kong's human capital is on the top of the SAR Government's agenda. The difficulty we are facing now is by no means unique to Hong Kong. During a television interview, the new Secretary of Labour of the United States stated outright that the greatest challenge in her term would be tackling the mismatch between manpower demand and supply. In Hong Kong, to solve the problem in the long term, we have to adopt a two-pronged approach. On the one hand we must implement education reform. On the other hand, we must promote life-long learning and encourage and help our workforce upgrade their skills so as to meet the needs arising from our economic restructuring.

Education Reform

3. On education, our emphasis is on pre-primary and basic education. In particular, more resources will be allocated to kindergarten and primary schools. In the new financial year, recurrent expenditure for pre-primary education will increase by over 30%. But as the base figure is small, it represents only 2% of the total expenditure on education. Nevertheless, the Government is committed to improving the quality of early childhood education and enhancing the professional development of kindergarten teachers is the pre-requisite to achieving this. We are actively exploring ways to expand the training capacity with a view to upgrading the academic qualifications of kindergarten teachers as soon as possible. However, at present over 8 000 serving kindergarten teachers in Hong Kong only possess an education at secondary level or below, and qualified kindergarten teachers only account for 70% of the total. In light of this, it is impossible to upgrade kindergarten teachers to university graduate level all at once. The Government will continue to allocate resources to enhance their training. Just like all of you, we are very concerned about the pressing need for enhancing the professionalism of kindergarten teachers.

4. With the progressive upgrading of the qualification of kindergarten teachers, the Government is reviewing the Kindergarten Subsidy Scheme and the Kindergarten Fee Remission Scheme to ensure that children of the relevant age group, in rich or poor families alike, have the opportunity to receive quality pre-primary education. The review is expected to be completed within this year. We will report to Members and consult the sector concerned in due course.

Vocational Training

5. On vocational training, the Government has invested heavily in recent years on the provision of various kinds of training and placement services for school leavers, the employed and unemployed and low-skilled workers. In 2001-02, the recurrent expenditure of the Vocational Training Council (VTC) amounts to over $2 billion, and a total of over 120 000 training places will be provided. Our recurrent subvention to the Employees Retraining Board (ERB) which has an annual training capacity of about 100 000 places amounts to $400 million. In addition, $400 million has been set aside for trade-specific skills upgrading training. A training fund of $300 million will be established to subsidise SMEs' training initiatives. An extra $72 million will be allocated over the next two years to provide subsidies for educational institutions and non-profit making organizations to run practical adult education courses to help new adult arrivals and local residents deprived of schooling in their early lives to upgrade their academic qualifications and skills. These initiatives aiming to provide appropriate and focused training to cater for different needs of the workforce demonstrates the great importance the Government attaches to vocational training.

6. Some Member have expressed concern over the effectiveness of training courses currently run by the VTC and ERB, and question whether the current allocation of resources is appropriate. In an era of life-long learning, the demarcation between pre-employment training, in-service training or retraining is becoming indistinct. We need to conduct a comprehensive review of the existing organizational set-up for the provision of training, the mode of delivery and division of work amongst existing bodies in order to strengthen collaboration and to reduce duplication, so that resources can be optimized and the training can better meet the needs of the market and the trainees. We envisage that the review will be completed by the end of this year. Meanwhile, the EMB will study the qualification accreditation framework in respect of vocational training with a view to ensuring that the courses provided are practical and useful to the trainees.

Admission of Mainland Professionals Scheme

7. Education is a long-term investment and there is no shortcut to retraining or skills upgrading. In an IT-led world economy which is becoming increasingly knowledge-based and globalized, professionals are being recruited by economies all over the world to boost their economic development. Manpower shortage of this category is inevitable and changes in the economic environment have been unexpectedly rapid. Whilst we have to enhance training for local talents on the one hand, we have to resort to admitting professionals on the other with a view to solving the short to medium term manpower shortage problem.

8. According to the analysis of the report on "Manpower Projection to 2005", manpower requirement in the IT sector is projected to grow at an annual rate of 11.8% to over 98 000 in 2005. The results are similar to the findings of the "Consultancy Study on the Manpower and Training Needs of the IT Sector" completed by the EMB in February last year and the report on the "Manpower Survey" conducted by VTC's Committee on Information Technology Training and Development in March 2000.

9. As regards manpower requirement in the financial services sector, it is projected to grow at an annual average rate of 3.7% to 220 000 by 2005. Within this sector, the manpower shortage projected for banks, insurance companies and other financial institutions is as high as 16 800 by 2005. In its first report submitted to the Government earlier, the Advisory Committee on Human Resources Development in the Financial Services Sector also pointed out that more talents had to be admitted to alleviate the manpower shortage problem.

Quota for the Scheme

10. The community generally endorses there is a need to admit Mainland professionals but views on the implementation details are diversified. Members have suggested that a ceiling should be set for the Scheme. In fact, we have been importing foreign professionals without a quota. What we are doing now is only to expand the scope to cover professionals from the Mainland. Despite the large labour market in the Mainland and our geographical proximity, there is no need to worry about an influx of professionals into Hong Kong as one of the pre-requisites is that these professionals must possess skills, knowledge and experiences which are useful to but are in shortage in Hong Kong. Besides, their pay and conditions must be broadly commensurate with the market level. Moreover, under the present Scheme, we are bringing in Mainland professionals only in two specific disciplines which are in great demand everywhere else in the world. It is believed that the number of Mainland professionals coming to Hong Kong under the Scheme will be far less than our anticipated manpower shortfall. Thus, adopting the manpower requirement as the ceiling for the Scheme is not very meaningful. If we set the limit at too low a level, we would be tying our own hands as it would not only dampen the will of Mainland professionals to come and work here, but would give others an impression of adopting protectionism.

11. We understand the concern of Members about the impact on employment of local professionals. Employment statistics show that in 2000, 99% and 98.3% of the local university graduates majoring in information technology and financial service disciplines respectively either continued further studies or entered the job market. Hence, admission of Mainland professionals is not likely to pose a threat to the employment prospect of local students. To dispel the anxieties of the public towards the admission of Mainland professionals, we will report regularly to the LegCo about the admitted professionals, including their number, pay, categorization by skills, etc. We will also formulate an appropriate review mechanism and will pay close attention to the employment situation of local professionals to ensure that they will have priority in their job placement.

Prevention Against Abuse

12. Some Members are concerned that the Admission of Mainland Professionals Scheme may be abused. The Government will consider Members' views carefully. In working out the implementation plan, we need to ensure that the Scheme is not abused and will avoid excessive administrative procedures which would undermine the effectiveness of the Scheme. I believe that the Immigration Department, with its sound experience in handling the admission of overseas professionals and Mainland talents over the years, will be able to strike a reasonable balance between the two.

Funding for Universities

13. Some Members have criticized that it was inconsistent for the Government to admit professionals on the one hand, and reduce funding for universities on the other. Also, some Members worried that the quality of tertiary education might deteriorate as a result. I urge Members and the tertiary education sector to look at funding for universities objectively from a historical perspective. During the ten years from 1990 to 2000, the Government's recurrent grant to universities has increased by 324%. As tertiary education has entered a consolidation stage and in view of the public's demand for enhanced productivity in the public sector, the University Grants Committee (UGC) agreed with the institutions in 1996 that there would be a total of 5% funding reduction within the six years from 1998/99 to 2004/05. The institutions have been given six years to embark on work process re-engineering and resources redeployment to enhance productivity.

14. Notwithstanding this, the number of university places has not decreased. The number of First-Year First-Degree (FYFD) places remains at 14 500 per annum and the number of postgraduate places will even have a 20% increase in the next triennium. In light of the change in student mix, the Government has in principle agreed to review the formula of calculating the student unit cost as soon as possible and to consider granting supplementary provision in the next triennium subject to the availability of resources.

More University Places

15. Some Members have suggested that more university places should be provided in the next five years to cope with the shortfall of professionals, and others have demanded an immediate increase in FYFD places to bring the age participation rate to 18%. I must emphasize that this percentage is only a planning target. Whether university places are to be expanded depends on the number of eligible candidates, the teaching and learning conditions in universities as well as the demand and supply of manpower. The provision of 14 500 places every year already covers 95% of the candidates who fulfil the minimum admission requirements. To allow some healthy competition and to maintain the quality of the student intake, 14 500 FYFD places is a reasonable number. In fact, in addition to the UGC-funded institutions, other institutions such as the Hong Kong Academy for Performing Arts and the Hong Kong Open University also provide over 1 000 places every year for young people who have the ability and are willing to further their studies

16. Notwithstanding this, we will closely monitor the situation and changes in the standards of students. Consideration will be given to increasing the number of FYFD places when appropriate. Members have also asked for the provision of more first-degree places for the IT and financial services sectors. It can be seen that subsidized FYFD places in IT and business/management/financial services have accounted for 13% and 25% respectively, making up a total of 38%. In order to ensure a balanced academic development for the universities, it is very difficult to further increase the number of FYFD places for these two sectors, given that the overall number of first degree places remains the same. However, the Open University and extra-mural departments of other universities provide for the IT sector a total of over 3 000 training places at the tertiary level every year. In addition, the VTC also offers IT introduction courses for university graduates of other streams, thus helping to fill in the gap of manpower shortage in this field.

17. To strengthen IT manpower training, the Information Technology and Broadcasting Bureau has set up a Task Force comprising representatives from the industry and training providers to examine and come up with training initiatives. The recommended measures include :

- bringing in world-renowned IT training providers to provide internationally recognized training programmes for local students;

- inviting well-established multinational IT companies, such as Microsoft and Sun Microsystems, to organize short-term professional training for secondary school students in Hong Kong; and

- examining the feasibility of providing subsidies for local IT talents to participate in training and attachment programmes offered by overseas IT training providers and companies.

The Government is committed to providing IT training for local people. But I hope Members would appreciate the fact that it takes time to make preparation in developing a new system and opening up new horizons.

Brief Summary

18. To tackle the shortage of professionals, we need to have a sound long term manpower strategy together with the provision of education and training. This is a formidable long term task. Nurturing talents is of utmost importance to the development of Hong Kong for which we will spare no effort. But most important of all, we must build up a life-long learning community so that we can keep pace with social and economic changes and be well-prepared for future needs.

Labour Protection and Outsourcing Government Services

19. Members representing the labour sector are concerned that the contract adopted for outsourcing government services has not provided sufficient protection as regards reasonable wages and working conditions. On this issue, the Government's stance is that it will try not to intervene in the labour market operation. We have no intention to legislate for the minimum wage or maximum working hours. Nonetheless, the Government will not tolerate any employers acting against the law, exploiting workers by cutting back their wages or leave. On the premise of not upsetting the principles of free market and fair competition, the Finance Bureau and EMB are actively looking into means to improve the arrangements for outsourcing government services.

20. We plan to ask departments which are considering outsourcing low-skill services to require tenderers to set out clearly in the work proposal of their tender submissions the planned number of employees, wage levels, working hours etc. In assessing a tender submission, the Government departments concerned would consider, apart from the tender price, whether the conditions of employment offered by contractors to their employees are reasonable and whether they can ensure quality service. We would request the departments concerned to develop an objective merit points system to ensure an appropriate balance between the quality of the tender proposal and the tender price.

21. We would also require all successful tenderers to carry out the undertakings set out in their tender submissions and would make provision that unauthorized departure would constitute a breach of contract. For monitoring purpose, we would require contractors to sign written contracts with all employees, except temporary leave reliefs, specifying their wages and other major terms of employment such as rest day arrangement, so that employees may fully understand their rights and benefits.

22. The new arrangements will still be market-oriented instead of the Government laying down rigid regulations on minimum wage, maximum working hours etc. Under the merit points system, consideration will be given to the arrangements and conditions of work set out in the tenders and tenderers must comply with their proposals in the tenders. We believe the new arrangements can provide a flexible and effective mechanism to prevent the employees from being exploited by unscrupulous employers.

23. We are currently consulting related departments on the new arrangements and will announce the details in one to two months' time. In the meantime, the Labour Department and other departments concerned will continue to carry out inspections and take enforcement actions to safeguard the reasonable rights of the employees as provided by the law.


24. I hope the foregoing would help Members understand that we have common goals as regards enhancing the quality of education and of our workforce. Given our consensus on the fundamental principle and direction, divergence of views over the details of implementation can be removed through discussions and consultations. The Government will continue to invest heavily in urgent and essential areas, but we must ensure that resources are used properly.

Last revision date: 04 April 2001
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