Minimum wage hasn't worked if low-paid can't make ends meet

PUBLISHED : Sunday, 23 December, 2012, 12:00am
UPDATED : Sunday, 23 December, 2012, 1:04am

How much Hong Kong workers should be paid is a highly controversial question. The city took more than a decade to reach a consensus on the need for a minimum wage to prevent abuses. After painful negotiations, bosses and unionists agreed to pitch the level at HK$28 per hour in 2010. Two years later, the minimum wage is due for adjustment for the first time.

With the cost of living rising fast and economic uncertainty growing, the review has, not surprisingly, aroused strong emotions on both sides. After weighing the pros and cons, the chief executive and his cabinet decided to adhere to HK$30 as recommended by the Minimum Wage Commission. Subject to approval by the Legislative Council, some 223,100 workers in the bottom ranks are due for a pay rise from May 1.

The HK$2, or 7.1 per cent, rise is a compromise at a time of high inflation and high business costs. While the hourly rate is still way below the HK$35 sought by the labour side, it is already a step forward from the employers' original demand for a wage freeze. As this is the first time the wage is being adjusted, a modest increase is understandable.

Employers argued that the overall wage bill will grow by HK$2 billion a year as a result of an extra two dollars. A big increase, they say, will only force businesses to fold or to pass the costs on to customers. We do not know how accurate the prediction is. But the doom-and-gloom scenarios that business leaders foresaw before the minimum-wage law was passed two years ago never came to pass.

Workers can be excused for thinking bosses have won the battle. The revised wage is still on the low side. It does not fully make up for the 9 per cent inflation of the past two years. As rightly pointed out by unionists, when an hour's wage is not even enough to get a lunch box from a fast food chain, it speaks volumes about how much protection the law provides.

The wage level is not a cap. Businesses that can afford to pay more should not hesitate to do so. That is the right way to reward performance and maintain talent in a competitive business environment. Most in the workforce are earning more than the minimum wage. But for those at the bottom, wages remain disgracefully low. They are the ones who warrant special attention. That is why the minimum-wage law was enacted. If low-income workers are still struggling to make ends meet, the wage law is not serving its purpose.