Escalating rents pose greater threat to small businesses than minimum wage rise

PUBLISHED : Saturday, 23 August, 2014, 2:41am
UPDATED : Saturday, 23 August, 2014, 6:50am

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I refer to the letter by Emily Ho ("Lower wage offer will best suit everyone", August 15).

If your correspondent had replaced the word "wage" with "rent", then her letter would have been more relevant.

That's why I am perplexed by her logic that wages could run a business into the ground.

Is there an example? I have never known a Hong Kong business experience failure because of wages. She's barking up the wrong tree.

She needs to do research on the hardship of operating small and medium-sized enterprises in Hong Kong.

Why is she concerned about a [proposed] 33.33 per cent increase from a statutory minimum hourly wage of HK$30 and not a 150 per cent rent increase that has just caused another cha chaan teng to close?

The owner never had the luxury of dealing with the minimum-wage-rise issue. A HK$10 increase would have cost him an extra HK$17,000 a month. It was irrelevant to him.

The pro-business camp likes to claim the ripple effect of a minimum wage hike but selectively ignores the tidal wave that is rent.

The statement "it would cost employers HK$1.4 billion a year" is a misnomer. What is HK$1.4 billion in a HK$2 trillion economy?

Employers can pass the cost of a wage rise onto the customers. However, they cannot do that with rent. That is why most fast-food chains, like Cafe de Coral and Maxim's, have moved upstairs.

Furthermore, minimum wage earners are unable to save. Every dollar they earn goes back to our economy, keeping the multiplier effect healthy, whereas a property owner often invests a chunk of profits overseas.

Likewise, the luxury brand tenants, mainly foreign, take their high profits home.

The minimum wage in Hong Kong applies only to the lowest stratum of the workforce. I have not yet seen such people working in an office.

It is amazing that Hong Kong, being one of the world's most expensive cities to live in, would have a minimum wage level at 40 per cent of that in other cities. More astonishing is that it catches so much attention by the media.

As I said, your correspondent should replace the word wage with rent. Lower rents would do Hong Kong a lot of good.

Tony Yuen, Mid-Levels