HONG KONG (SE): The Hong Kong Catholic Commission for Labour Affairs urged the government to review the minimum wage level annually instead of every two years so that the adjustment can better keep up with inflation. It also pointed out that raising minimum wage would not be a big burden for employers even in the economic downturn.
The statutory minimum wage first came into force on 1 May 2011 and was initially set at $28 per hour. After four adjustments, the current wage was fixed at $37.5 per hour on 1 May 2019.
According to a September 24 report in the Apple Daily, while the Minimum Wage Commission is reviewing the minimum wage for the sixth time and a report was due at the end of October, members representing employers and the employees were unable to reach consensus.
Employer representatives pointed out that under the pressure of the economic downturn an increase in minimum wage may lead to businesses shutting down and result in unemployment. On the other hand, members representing employees said the minimum wage should be increased considering financial difficulties in the midst of the Covid-19 coronavirus pandemic and the lagging of wages behind inflation.
In a statement posted on the commission’s Facebook page on October 30, also posted in the Kung Kao Po on November 1, the commission said it is unjust for employers or business owners to reduce operating costs through low employee wages because running a business encompasses many factors such as high rent and the high cost of electricity in a monopoly market.
“In fact, employees paid the minimum wage already have the lowest paid jobs in an enterprise. They only account for a small percentage of the total labour cost,” it said.
Government figures from May to June in 2019 showed that only slightly more 20,000 people are receiving minimum wage. The labour commission pointed out that, even before income reduction resulting from having to take unpaid leave, these employees were already in financial difficulties and will suffer from a freeze or even a decrease in the minimum wage.
The commission also observed that, according to the figures from the Census and Statistics Department in 2019, the median hourly wage of security guards, cleaning workers as well as unskilled workers in the catering, retail and transportation sectors were far higher than the statutory minimum wage. Therefore, it believes raising the minimum wage will have little effect on the operating cost as many employees are already being paid more than the minimum.
It also noted that the government is using lagging indicators to set the minimum wage which cannot catch up with inflation. the level coming into effect in May 2021 will be based on statistics collected in 2020.
“However, the sixth Statutory Minimum Wage is effective until April 2023. It is impossible to predict the economic situation for such a long time from now,” it added.
“If the economy recovers and inflation returns, workers receiving minimum wage will not receive a timely increase in salary. Their purchasing power will be reduced by inflation before the next adjustment,” it says. The commission worries that low-paid workers may find it even harder to make both ends meet by then.
The commission urged the government to learn from other countries such as the United Kingdom, Australia, New Zealand, France, Japan and South Korea, which conduct a yearly review of their minimum wage. It should also learn from the Low Pay Commission in Britain which initiates a public consultation at once after a minimum wage comes into effect instead of waiting for the release of government figures before taking any action.
It urged the government to illustrate the basic daily needs of families with an indicator using scientific research and consider it the most important indicator among others while considering the minimum wage.
It believes many families, even though working, do not earn enough to maintain basic family needs. The Hong Kong Poverty Situation Report in 2018 showed that more than 186,000 working households live in poverty as they do not benefit from the Comprehensive Social Security Assistance Scheme. Over 50 per cent of them are families with children.
The statutory minimum hourly wage suggested by the commission is $49.4, which is the median of the hourly wages of unskilled workers released by the Census and Statistics Department in 2019.
