But once the panic ended, so did Mr Cheung's brief span of happy days. Like many blue-collar workers, the 45-year-old veteran plumber was one of the great beneficiaries of the pre-handover economic boom. Ask any taxi driver or construction site labourer, and they will tell you tales of the good old days when a monthly income of HK$20,000 was the norm rather than the exception.

But the 1997 global stock market crisis shattered their dreams. Then severe acute respiratory syndrome seemed to deal the final blow to Hong Kong's economy. In 2003, the jobless rate peaked at the unprecedented level of 7.9 per cent: 275,000 people were out of a job. The government's social welfare spending under CSSA skyrocketed to HK$16.1 billion. The number of applications for unemployment relief rose to 44,224, then climbed to 47,016 a year later.

Ever since then, 58-year-old kitchen worker Suen Yam-chi has been on the dole. 'I try a few times every week to call about job postings in the newspapers, but they always say I am too old or not qualified for the work,' he said.

Under the welfare system, Mr Suen must keep looking for a job to remain eligible for the monthly HK$1,400 subsidy from the Social Welfare Department, but deep down he has given up.

'What good does it do if I find a job that pays me HK$3,000-odd,' he said. 'Right now I can still muddle through on my meagre allowance by cooking at home. But if I go back to work I must eat out and travel, and I simply cannot survive.'

The prospects are no better for Mr Cheung, who found a job in a small engineering firm in 2004. 'After 20 years in the field, my salary was reduced to the level of an apprentice, but I dare not take my chances in the open market. I have a six-year-old daughter to feed.'

In February, Financial Secretary Henry Tang Ying-yen announced an impressive HK$60 billion budget surplus. Workers enjoyed an average pay rise of 2.5 per cent earlier this year and the number of dole applicants fell to 36,634, according to the Hong Kong Institute of Human Resource Management.

That does not mean, however, that workers in the market's lowest tier were becoming better off: while the dole applications dropped, there was a rise in welfare applications from those earning incomes too low to live on. They increased from 15,672, or 5.3 per cent of all CSSA cases in 2004, to 18,000, or 6.1 per cent.

Chinese University assistant social work professor Wong Hung said while the figures reflected government success in pulling some unemployed people back into the job market, their pay was so low that they still needed assistance. 'The government is subsidising the business sectors for their labour expenses,' he said. 'To plug the loophole, the government should work towards a workfare [when the state tops up low-income workers' pay] economy.'

In his last policy address, Chief Executive Donald Tsang Yam-kuen promised the government would consider a minimum wage law should a voluntary wage-protection movement - which seeks to protect workers' wages in two low-paid sectors - fail.

No verdict has yet been passed on the two-year voluntary programme, which ends in October next year.

Unionist lawmaker Lee Cheuk-yan said the government's promise marked a leap forward. 'However, we must not be too happy about it because even if there is a minimum wage law in two years it would only apply to cleaning and security workers, and the number of beneficiaries would be far too small,' he said.

The Labour Advisory Board is still debating the benchmarks to gauge the success of the voluntary scheme. But overall, sentiment is sceptical. Six months into the programme, launched last October, only 916 companies out of the 15,000 relevant employers in Hong Kong have participated. The scheme safeguards the income of 25,000 cleaners and security guards, less than 16 per cent of such workers in the private sector.

Major business chambers and the Employers Federation have all along been vocal in opposing a legal wage floor. They say it would lead to higher costs, weaken Hong Kong's competitiveness and increase the jobless rate among those with the least bargaining power.

But Mr Lee, founder of the only independent union in Hong Kong - the Confederation of Trade Unions - said the trend towards a workfare society is unavoidable for all developed nations.

'Let's not compare ourselves with the United States or Europe: we are far behind their standard,' he said. 'But all our competitors in Southeast Asia, including Japan, Taiwan, South Korea, Malaysia and Singapore, have statutory minimum wages and maximum working hours.'

Mr Lee accepted, though, that local labourers had generally enjoyed more rights since the handover than before, and this was a move in the right direction.

He said if all 18,000 low-income earners receiving CSSA top-ups were paid a minimum wage at the union's recommended level of HK$6,000 a month, it would save the government HK$200 million a year.

Among the biggest improvements in labour rights since the handover are: the guarantee of an average market rate of pay for all outsourced public work; a 60 per cent drop in the average annual number of industrial accidents; a 25 per cent lowering of occupational disease rates; and a reduction in the cases of illegally withheld back pay, through publicity campaigns and tougher penalties.

'We don't imagine Hong Kong will become a workers' utopia in the next decade, but we hope 10 years from now there will be less injustice,' Mr Lee said.