Minimum wage can benefit Hong Kong, says Nobel laureate

A well-structured minimum wage can have a positive impact on Hong Kong and should be encouraged, says Nobel laureate Christopher Pissarides.

In an interview with the South China Morning Post, Pissarides also warns against rising debt levels in China, drawing parallels with the troubled euro zone and his native Cyprus.

"I am supportive of a minimum wage because of the encouragement that it gives to young people in particular, and older and not well-qualified people who feel they might be exploited," he says.

A specialist in labour market theories, Pissarides says the challenge is to find a level that protects workers without discouraging hiring. He recommends a starting level equivalent to 40 to 45 per cent of the average wage.

In the United States, the level is too low "and does not provide the security it needs to provide", while in France, at about 55 per cent of median income, it is "discouraging employers … and creating unemployment".

The Hong Kong minimum wage remains a contentious issue between employers and unions since it was introduced in 2011. Originally set at HK$28 an hour, it was raised to HK$30 in May. Unions wanted HK$35.

According to the Census and Statistics Department, the average monthly salary in June was HK$13,982. Assuming a 48-hour work week plus meal times, a worker earning the minimum wage would take home HK$6,240 a month - within the framework suggested by Pissarides.