Lessons from Britain show that a ripple effect of inflated wages following the introduction of a minimum wage is very limited, an adviser to the British Low Pay Commission says.
The local catering industry and the Liberal Party have proposed setting a minimum wage of HK$24 an hour and warned that even at that level business would be severely affected by a ripple effect that would push up the wages of workers earning more than the minimum.
But Professor Geoff White dismissed fears of such an effect. White, who is an adviser to the Low Pay Commission, was scheduled to attend a Baptist University forum, 'Meeting the Challenges: Implementation of the Minimum Wage Legislation in Hong Kong', yesterday, but he could not make it because of the Icelandic volcanic ash cloud.
In a keynote speech read out by Professor Edward Snape, head of the management department at Baptist University, White noted there was a sceptical predication that a minimum wage would lead to wage increases for many workers earning higher than the minimum as they would seek to reassert their differentials over lower-paid workers.
'The evidence does not support this contention. In general, those above the minimum wage appear to have received a smaller pay increase over the period than those at the level of the minimum wage,' White, who is also professor of human resource management at the University of Greenwich, wrote.
He added that the wage structures of low-paying sectors might partly explain any effect. 'In general, low-paying sectors have fairly flat pay structures so that the majority of workers are in the lowest-paid grades. Increasing their pay levels will therefore have minimal overall effect on the pay bill of higher-paid workers in the organisation,' White wrote.