Strike a balance on minimum wage

PUBLISHED : Thursday, 29 March, 2012, 12:00am
UPDATED : Thursday, 29 March, 2012, 12:00am


When the minimum wage law was introduced in May last year, hopes were high that the HK$28-an-hour wage floor would improve the life of the worst-paid workers and help narrow a growing wealth gap. The government says this appears to be the case. According to wage figures in May and June, the median monthly income for the lowest wage bracket has increased by 17.7 per cent compared with the same period a year earlier. Assuming the figures reflect reality, it is reassuring to see the law is having a positive impact on those on the bottom rung of the social ladder.

Despite the increase, these workers are earning at most HK$6,900 a month. It is, therefore, not surprising that labour activists have argued for a higher adjustment in the run-up to a review later this year. They argue that wages in society have since increased, pointing to the latest median monthly income for all workers of HK$12,800, up from HK$11,800 in 2010. To catch up with steep inflation and spiralling wages, the minimum wage should be increased to no less than HK$33 per hour, they say.

The gloomy scenarios painted by employers opposing the wage law have not happened so far, but this does not mean there is room for a big increase without first weighing carefully a basket of factors. Inevitably, business costs increase with a bigger payroll. It is no use pitching a level that bosses cannot afford. The government wage figures also only reflected the situation in the first two months of the year. An assessment of the full impact of the law requires more figures.

The newly elected chief executive is likely to face growing pressure for a higher minimum wage as the Legislative Council election draws nearer. He needs to ensure workers have a decent wage so they can live with dignity, while shielding our business community from adverse impact. Striking the right balance is the key.