Academic challenges minimum-pay claim

PUBLISHED : Sunday, 14 May, 2006, 12:00am
UPDATED : Sunday, 14 May, 2006, 12:00am

A unionist and an academic yesterday criticised Hong Kong General Chamber of Commerce chief economist David O'Rear for saying the introduction of a minimum wage would lead to job migration and reduce employment opportunities.

Mr O'Rear was speaking at an international symposium on how public policy can help the working poor in Hong Kong, at which local and overseas academics presented their views on minimum wages and alternative policies, such as wage subsidies and the 'workfare system', which requires welfare recipients to work.

'One of the most disturbing trends in the market is anti-globalisation, which is increasing trade barriers,' he said.

'Hong Kong is very vulnerable to job migration and outsourcing because, unlike the UK, where the minimum wage is national, investors can move to other countries to get cheap labour.

'The imposition of minimum wages may also drive investors away and, in the long run, there may be fewer jobs created.'

He said the government should, instead, reduce profit tax and encourage hiring.

But Dennis McCann, of the Department of Management at Chinese University, hit back, saying investors would have little incentive to leave simply because of higher labour costs. 'The proportion of labour costs to the value-added production costs in Asia has been dropping tremendously,' Professor McCann said. 'As such, there is less incentive to outsource.'

He urged greater co-operation between the business sector and the public in fighting poverty.

Wong Kwok-kin, chairman of the Federation of Trade Unions, said business leaders should not mislead the public.

'Labour costs are not the sole factor in choosing to invest in Hong Kong or the mainland,' he said.

'We agree that minimum wages would affect employment levels, but the impact would be minimal.'

He called on the government to stop avoiding its responsibility in implementing the policy.

'All we are asking for is decent pay, one that would pay for the basic living of one's family. It is not too much to ask for.'