Use your noodle to find the ideal minimum wage

PUBLISHED : Wednesday, 28 April, 2010, 12:00am
UPDATED : Wednesday, 28 April, 2010, 12:00am

The debate over minimum wage legislation has entered the final stages with the focus now shifting to what level it should be set at. An earlier suggestion of HK$20 an hour by catering-sector lawmaker Tommy Cheung Yu-yan was widely criticised, prompting him to revise it to HK$24.

Both proposals simply reflect the fact that many unscrupulous employers are trying to suppress wages for unskilled workers in order to minimise the economic effects and protect profit margins.

They often use scare tactics by exaggerating the knock-on effects, saying that a minimum wage would create unemployment for older, unskilled workers because employers would rather hire younger people. They also warn that, if the minimum wage is set too high, it might create a ripple effect, causing salary inflation.

These are all unfounded theories because, even if we raised the monthly wage of a cleaner or a dishwasher from HK$4,000 to HK$7,000, it still wouldn't be attractive enough for the younger workforce. In fact, setting a minimum wage is not just an economic issue, it is a social and political one as well.

Cheung said earlier that employers should not be responsible for paying workers enough to survive on. What he said was not only heartless, but also politically incorrect. Society has a responsibility to ensure that a worker's pay will equal the subsistence wage, to provide him and his family with the basic needs to survive. If they can raise a family, that means they can produce a new generation of workers to replenish the workforce for the continuation of the economic cycle.

If these workers can't survive, neither can businesses in the long run. This will also affect society as a whole. It is simple logic, plainly articulated by the Chinese saying: 'With the skin gone, what can the hair adhere to?'

We don't need big economic theories to assess the ideal level of a minimum wage. The best benchmark is my wonton noodles theory. In the 1950s, a bowl of wonton noodles cost 30 cents; today, it costs at least HK$12 - and even up to HK$28 at some famous noodle shops. So, if a worker's HK$24 hourly wage can't even match the price of a bowl of noodles, how can we say it's acceptable? The fact that this kind of salary can't even match that of the 1950s and 60s - when people could earn at least more than 30 cents to afford a bowl of noodles - is deplorable.

The cost of living in Hong Kong is one of the highest in the world. A small public housing unit costs at least HK$1,000 a month to rent, and with travel costs and other incidental expenses, there is no way a person on an hourly rate of HK$24 can feed himself properly. The minimum rate of HK$33 proposed by labour representatives is more than reasonable and should be the starting point for the wage law.

Cheung has exaggerated the issue, saying a wage above HK$24 would force many catering businesses to close. We all know that the real culprit is not the cost of labour but high rents, which amount to 30 to 40 per cent of overhead expenses.

By suppressing the minimum wage, Cheung is in effect asking the poor to help subsidise their employers' rent. Is he suggesting that we should all work for property developers? If he really wants to defend the catering industry, he should be pointing the accusatory finger at developers.

If we can't stop the rapid rise of rents, which ultimately cause many business closures, so be it. Then, if businesses can no longer afford the high rents and demand dwindles, the landlords will have no choice but to adjust the price downwards. That is the effect of supply and demand, or poetic justice.

Albert Cheng King-hon is a political commentator.