Jake's View

HK employers protest too much about minimum wage

PUBLISHED : Thursday, 27 September, 2012, 12:00am
UPDATED : Sunday, 30 September, 2012, 7:49am

Bosses warn proposed new HK$30 hourly [minimum] rate will force up prices, especially for food, while workers say it will be eaten up by inflation

SCMP sub-head, September 26

I have a question for the restaurant owners and property managers who seem to comprise pretty much the totality of these "bosses" we quote: How would you feel if, the more profits you made, the more you were told to share them with newly arrived outsiders who didn't contribute to them at all?

You'd be reaching for the phone to call your lawyers to stop it on the spot, wouldn't you? That's if you hadn't already phoned the police because you thought it a crime.

Now consider it from the perspective of the workers in a labour-intensive industry such as restaurant operation. The role of the bosses is to provide the capital and management. The role of the workers is to provide the labour. Put them together and you get a functioning restaurant. Take either away and you get nothing.

What the workers see in this equation is that they in their millions have played a role easily as important as that of their bosses in building an increasingly prosperous society.

But while the bosses reap the benefits in higher profits and dividends, every time these bosses face the prospect of paying higher wages they convince the government to open the border floodgates to low-paid migrant labour and the wages stay down.

It's for the good of Hong Kong, they say, because otherwise our economy would become less competitive against its rivals. Inflation would also go up.

But, say the workers, what's the good of Hong Kong if it's not for the good of the people of Hong Kong? If we don't share in the benefits of prosperity, how much good of Hong Kong has there really been? And if sharing in these benefits contributes to inflation, we are still better off than with no increase in wages.

I'm not one to deny the bosses their return on invested capital, but I also think the workers' argument is valid. Thus let me propose a new way of doing things. We shall abolish the minimum wage law and we shall also restrict further employment to holders of permanent ID cards alone.

I know what will happen. Even with open borders, there is a tight inverse correlation between unemployment and wage growth, as the chart shows. In any economic boom, wages would rocket up. Income disparity would recede after rising for many years and we would create a large middle class, the distinctive hallmark of a civilised society.

Yes, restaurant prices would go up, too. We would find ourselves eating at home more, a healthy change from restaurant grease. And yes, industry would find foreign competition tougher. That's the way a society grows up. Easy life in industry is like easy life at school. You get left behind. We wouldn't be. Our economy would move upmarket.

I don't think there is the slightest chance that the employers' federation would ever consider my proposal. The bosses want the low-wage easy life. But don't let them tell you that theirs is the free-market way in labour. It's not. It's a skewing of the labour market with the connivance of government.

Let's also remember that the government already gives them enormous indirect wage subsidies. A third of our population (and probably 95 per cent of restaurant workers) live in public rental housing where the average rent is HK$1,200 a month. These people also now qualify for a HK$600 a month travel allowance if they make less than HK$10,000 a month, which is well above average waitress pay.

I call this a wage subsidy. Employers are fully aware of the social benefits their employees receive and adjust their wage scales downwards accordingly. I think they make far too much noise about the minimum wage.