The state of labour relations in Hong Kong remained harmonious. In 2005, the Labour Relations Division of the Labour Department handled 237 trade disputes, a decrease of 12 per cent from 2004. There was only one work stoppage, resulting in the loss of 100 working days. The average loss was 0.03 of a working day per 1 000 salaried employees and wage-earners, which is among the lowest in the world. During the year, the division handled 25 952 claims for wages and other employment-related benefits or entitlements. This represented a decrease of nine per cent from 2004. Of all disputes and claims conciliated by the division in 2005, 69.8 per cent were settled — a record high since 1994.

The Labour Department organises a wide variety of activities to promote harmonious labour relations in Hong Kong. To enhance public understanding of the Employment Ordinance, promotional activities such as talks and briefings are organised and a wide range of publications is produced for free distribution to the public. Also, the information is widely publicised through the department's website and the media. In 2005, a large-scale seminar was organised by the department to invite the winning establishments of Good People Management Awards 2004 to share their enlightened practices with other employers, human resources practitioners and trade unions.

At the enterprise level, the department promotes good labour management practices and effective communication. A network of 18 Human Resources Managers' Clubs has been established and experience-sharing sessions and briefings are organised for human resources practitioners. The department also promotes tripartite dialogue at the industry level by setting up committees of employers, employees and labour officials. With the assistance of the department, nine tripartite committees have been formed, covering the catering, construction, theatre, logistics, property management, printing, hotel and tourism, cement and concrete, and retail industries. In 2005, in collaboration with the committees, the department organised seminars and published guidebooks for specific industries to promote good people management practices.

Trade Unions

The Registry of Trade Unions administers the Trade Unions Ordinance and promotes sound and responsible trade union administration. Once registered, a trade union becomes a body corporate and enjoys immunity from certain civil suits.

In 2005, 28 new unions were registered, bringing the number of registered trade unions to 729 (comprising 686 employee unions, 21 employers' associations), and 22 mixed organisations of employees and employers). There were also three registered trade union federations. In the past five years, the declared membership of employee unions has stayed at around 670 000 with the trade union participation rate at about 22 per cent.

About half of the employee unions are affiliated to four major labour organisations registered under the Societies Ordinance: the Hong Kong Federation of Trade Unions (158 unions), the Hong Kong and Kowloon Trades Union Council (36 unions), the Hong Kong Confederation of Trade Unions (68 unions), and the Federation of Hong Kong and Kowloon Labour Unions (55 unions).

Protection of Wages on Insolvency Fund

The Protection of Wages on Insolvency Fund provides ex gratia payment to employees who are owed wages and other termination benefits by insolvent employers. It is financed by an annual levy of $600 imposed on each business registration certificate. The fund covers arrears of wages not exceeding $36,000 accrued during a period of four months preceding the applicant's last day of service; wages in lieu of notice for termination of employment up to $22,500 or one month's wages, whichever is less; and severance payment up to $50,000 plus 50 per cent of any entitlement in excess of $50,000.

As Hong Kong's economy further improved, the number of applications for the fund continued to drop. During the year, the Labour Department launched proactive measures to clamp down at source on employers evading their wage liabilities, thus preventing wage defaults from developing into claims on the fund. The number of applications decreased from 13 631 in 2004 to 9 967 in 2005, a substantial drop of 27 per cent. The financial position of the fund also improved — a surplus of $259 million was recorded in 2005. During the year, the fund disbursed a total of $205 million to 10 444 eligible applicants.