Minimal fuss

PUBLISHED : Thursday, 26 April, 2012, 12:00am
UPDATED : Thursday, 26 April, 2012, 12:00am


The minimum wage has been with us for almost a year - the outcome of a prolonged and bitter public tussle between employers and employees. Now it is due for review. Round two looks no easier than round one.

The posturing has already begun. Employees and their advocates want it adjusted upwards, to HK$35 per hour, from the current HK$28. Employers are countering with claims of economic hardship for their business.

Unfortunately for the employers, their dire predictions of massive lay-offs and business closures did not materialise following enforcement of the legislation. Not only that, the new measure has generally been considered an unqualified success, bringing about an improvement in the living standard of low-wage earners without inflicting any significant injury on small and medium-sized businesses.

In fact, the latest employment figures show that there has been a healthy increase in the working population, with the jobless rate kept at a reasonable level. For the first time, low-wage earners have begun to share in the fruits of their labour and the largesse of business success. Against this rosy picture, any warnings from the employers are likely to be seen as crying wolf again.

But what worked last time may not work equally well this time. SMEs might have had a sufficient financial cushion to absorb the previous wage increase. But small businesses don't have an infinite capacity to absorb sizeable wage rises.

Among other things, they face severe rental pressure, the result of the government's high-price land policy. Another significant jump in the payroll may see them edge close to the limit of survival.

The Minimum Wage Commission is treading carefully. It has conscientiously studied the projected figures. Members know, for example, that if the minimum wage is raised to HK$33 per hour, then 520,000 workers would stand to benefit from the average increase of 12per cent. The raise would add 1per cent of costs to local enterprises' operating budget. In absolute terms, that rate of increase comes to a total tab of over HK$4.7billion.

The trick, of course, is to come up with a rate that would not impose undue hardship on business or trigger a financial crisis for business owners. Some employers are asking whether this line of thinking will lead to an endless quest for ever higher wages. And shouldn't wage increases somehow be tied to increased productivity?

The hidden collateral costs of the general wage increase sanctioned by law might have escaped the notice of the commission's members. Younger wage earners may now live with greater dignity. But a considerable number of older workers have been driven onto the welfare rolls against their will. Some constituents have told me that they have seen changes in the face of service in public estates and malls. Older security guards and customer relations personnel have been replaced by younger people. The same goes for servers at food outlets.

Government jobless rates are misleading, in that those who choose not to register for benefits are not reflected in them. They are reflected instead in higher welfare payouts.

I once asked a white-haired septuagenarian pushing a cartload of discarded cartons why she would not give up this hardscrabble existence by getting public assistance. She threw me a stare and said: 'As long as I still draw a breath, I don't want charity from anyone!' In a humane society, we should cater to the desire of the elderly to live with dignity.

So, enacting and enforcing the wage law is a double-edged sword. It can improve the lot of many on low incomes. At the same time, it can break the rice bowls of many weaker or older workers, consigning them to welfare or even institutions for the aged.

It is therefore incumbent on the commission's members to strike a balance. The proposed wage review once every two years may be an unnecessarily disruptive mechanism for small and medium-sized businesses.

We could consider a less cumbersome mechanism - that is, tie wage increases to inflation rates. This way, workers' quality of life would receive automatic protection with a reasonable adjustment, without them having to resort to activism.

The way we approach this current review will set the tone for the future. I believe a simpler review system is good for labour relations, as it takes into account the competing needs of employees and employers.

I would also advise politicians or political parties against milking the issue. Their grandstanding may only muddy the waters, leading to an outcome where both parties are the bruised losers.

It makes sense, therefore, for us to come to a consensus on the core principle that underlies any wage review. If it tracks the general wage demands of the wider community, we must also take into consideration the unintended consequences of older workers being elbowed out of the labour market.

But if we care about protecting their right to gainful employment, and according them the dignity of earning their own livelihood, then using the rate of inflation as a benchmark would serve this purpose better. I favour the virtue of simplicity, if it means taking the cudgels out of the hands of politicians or professional agitators and leaving it to a fairer system of automatic review.

Michael Tien Puk-sun is chairman of international garment retailer G2000 and vice-chair of the New People's Party