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  • Oct 1, 2014
  • Updated: 11:06pm
PUBLISHED : Sunday, 15 December, 2013, 4:14am
UPDATED : Sunday, 15 December, 2013, 4:14am

Everyone in Hong Kong deserves a living wage

Philip Bowring says the existence of a large minority of citizens impoverished by low pay and poor income distribution should shame officials into action - first, by raising wages


Philip Bowring has been based in Asia for 39 years writing on regional financial and political issues. He has been a columnist for the South China Morning Post since the mid-1990s and for the International Herald Tribune from 1992 to 2011. He also contributes regularly to the Wall Street Journal, www.asiasentinel.com, a website of which he is a founder, and elsewhere. Prior to 1992 he was with the weekly Far Eastern Economic Review, latterly as editor.

It must be a decade, possibly two, since attendants filled up your car at a petrol station almost anywhere in western Europe. You do it yourself. But here in supposedly rich, technologically advanced Hong Kong, petrol stations are manned by eager attendants who sometimes outnumber the pumps.

This is just one of many pieces of anecdotal evidence pointing to two inter-related issues: the illusion that Hong Kong suffers an overall labour shortage, and the reality of the low level of wages of most workers, especially the unskilled and semi-skilled. The current minimum hourly wage is roughly half that of the US and Britain, one-third of that in France and almost a quarter of that in Australia.

Of course, most people are paid more than the minimum wage but the median wage in Hong Kong, which is roughly double the minimum, lags behind that in most advanced societies. At the macro level, the portion of national income paid to employees is low in the first place and its warped distribution makes it worse.

Poverty so evident in a large minority of Hong Kong's population has many causes but chief among them are low wages and the government's deliberate suppression of welfare and transfer spending. The latter has recently been brilliantly documented by Leo Goodstadt, former head of the Central Policy Unit, in his recently published book, Poverty in the Midst of Affluence. Current chief scrooge, Financial Secretary John Tsang Chun-wah, should be required to read this before presenting his next budget.

But this column is mainly about low wages. The government argues that wages are set by supply and demand in the labour marketplace. The minimum wage was introduced only recently and very reluctantly. It has done something to ease conditions for the lowest paid. But, at the same time, it shows up the huge numbers being paid wages which are so low that, unless supplemented by public housing, CSSA and other conditional assistance, they make normal family life impossible.

The irony is that if incomes were better distributed, the pressure on the government to use its huge revenues for social purposes would be less. But the government itself, as the largest employer, has been a major agent in suppressing the wages of the low-skilled. Government reduction of staffing and use of contractors to provide various services took a large number of unskilled workers out of the civil service, where there are formal pay scales and a degree of collective bargaining, into a situation where they had no bargaining power at all.

Needless to say, the middle to higher echelons of the civil service were not only exempt from this outsourcing but continued to enjoy higher salaries than most of their peers in the private sector. Meanwhile, at the bottom end of the pay scale, the government's undercutting of wages flowed through the whole private sector.

Nor is suppression of wages just seen among the unskilled. The Lamma ferry disaster and the dock crane operators' strike have cast light on how poorly paid are many with exacting jobs and heavy responsibilities.

Naturally, small businesses such as restaurants worry that big increases in wages for the likes of cleaners will make their businesses unviable. But, in most cases, rents are a bigger burden than wage increases. And no business should exist if it cannot pay a wage that provides a minimum living standard. Higher wages will kill some businesses but create new demand for others. They will also drive something badly needed in Hong Kong - higher productivity.

For sure, there are labour shortages in some sectors which cannot simply be filled by increasing wages. Construction is one, given the heavy manual work involved. But mega projects like the high-speed railway were originally justified by the government for their job-creating impact. So there is scant excuse now for using any shortage as a lever for the broader relaxation of labour import demanded by the developer/contractor interests.

The government itself spends a lot on supporting bureaucrats at the Productivity Council but foreigners comment on the poor productivity of Hong Kong's construction sector. Failure to focus on productivity is explained by low wage levels and the fact that corporate profits are more determined by land price inflation than by operating efficiently.

Another factor in wage suppression is the easy availability of domestic helpers. This is not to criticise helpers. But the fact that an unknown but certainly significant proportion are paid far less than the law demands - and have zero job protection - has a twin impact on poverty. It supplants opportunities for older local women to earn a decent wage child-minding, and access to cheap foreign labour increases the gap in living standards between households which can afford helpers, and the bottom 70 per cent of society.

Real wages have been declining as a share of Hong Kong's income. It is time to reverse this socially divisive trend. The government can lead by setting much higher minimums for those working for it via contractors, by not treating strikers as enemies and by keeping a lid on unskilled labour imports. Instead, let us see the lawyers, doctors and so on face competition based on actual skills.

Philip Bowring is a Hong Kong-based journalist and commentator


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This article is now closed to comments

Everyone in Hong Kong deserves a living wage –the imperative is self evident here in Hong Kong and beyond.
Better still, let we all agree that besides a living wage there is no other way except more than a living wage.
Sure. We all deserve living wages, good homes, good air, good food, holidays overseas. But who pays?
"...no business should exist if it cannot pay a wage that provides a minimum living standard..." Does the writer live in HK? It is easy to make platitudes about ideal conditions, but take a walk around Mongkok, and tell me how many business would survive if it paid its workers minimum wage? Look at the fishball sellers, the fruit stands, the multitudes of sports shoes shops, restaurants of all sizes, computer shops, poky little under-staircase stalls. Would they still be around if the owners had to pay minimum wage? I am not advocating for poor pay, but the reality is that either many people get some pay, or a privileged few get a living wage. There are no social benefits for the unemployed to sit at home to do nothing, so any job at any pay is preferable. Until we reach Utopia.
To quote an example, Australia has minimum wage protection. So small businesses do not hire, and family members help out, and the businesses remains small. Many people can't afford plumbers and carpenters and gardeners, and so everybody learns to paint their own homes, fix the toilets, weed and plant in their yards, and even pave their own driveways. The hardware stores are full of ordinary people figuring out what they need for their next project. Or would you prefer to see full employment?
Well-argued Philip, yes the government should consider broadening the labour catchment as well as lifting the mechanisms to depress salaries- at its worst dishwashers, reputedly eateries can get anyone to work as dishwashers at HK$12k pm.
One of the more thought-provoking movie was "In TIme" in which the only form of barter is time itself. Other than rentals [office, flats] and services [CLP, gas, petrol] going off the roof, the HK$-dollar is another culprit that CY Leung should broach VP Li & P Xi this trip- that HKSAR should consider dropping the peg before he ends his term.
HK's minimum wage is one-third that of France but Philip hasn't mentioned that the unemployment rate of France is three times higher than HK. As HKers we should ask ourselves one question. Does it make practical sense to take economic advise from people who come from countries that almost never had budget surpluses over the last 2 to 3 decades? Whereas we here have had budget surpluses for 80-90% of our time for the last 2 decades.
The HK govt has the mindset of making money and accumulating huge reserves from her own people ever since the last HK governor boasting of egyptian dowry of reserves. Apart from the Govt Associates (tycoons, civil servants, welfare dependants, licensed monopolies), all other non-associate ordinary people are most likely to be exploited.
HK is a rich financial centre for the rich and the vested interest. The majority poor have to suffer with long working hours (or two jobs) and live in poverty. Either be one of the associates or vote with your feet and leave HK.
Philip Bowring is another supporter of state violence against its citizens. He shuns voluntary agreements and labels banning of creation of wealth at gunpoint "advanced". I'd call it barbaric. But what can you expect from someone sitting in his Ivory Tower conceptualizing the world through government statistics where moral, principles and humanism have no value.
"...no business should exist if it cannot pay a wage that provides a minimum living standard..." I absolutely agree with this. I have heard spokesmen from the business community say the opposite, that it is not business' responsibility to see that workers have enough to live on. The callousness and shortsightedness of such a point of view is stunning.
Mr Bowring makes an excellent point about the government's application of contracted services. What this actually does is enrich a 'middle man' (the contractor) and impoverish the workers themselves. I remember my old company bidding for a government contract and being outbid by a firm that, on its quoted price, could not possibly be paying a living wage. There is a good social argument for reversing the 'outsourcing' trend for public services and for the government to employ labour directly.
Outsourcing ?
fantastic ! HKers would be changed from boss into servants of the civil servants !




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