Technology threatens cheap labour after adoption of minimum wage
From iPads taking food orders to an automatic hair-washing service, the minimum wage has hastened technological changes to replace cheap labour, writes Elaine Yau
When customers walk into the Fix-Up Hair Salon in Tuen Mun, there won't be the pampering wash and scalp massage that many have come to expect of a shampoo session. They lie back in the usual reclining chairs and, instead of being served by a shampoo assistant, they have their heads strapped to a machine that does the washing.
The automatic hair-washing machine can't undertake tasks such as colouring treatments or perms that require more expertise and skilled fingers. A bowl-like device that is attached to the head, it works by shooting powerful jets of water and shampoo or conditioner solutions at programmed intervals. To ensure thorough cleansing, the process normally takes about 15 minutes - double the time an assistant would take to lather and rinse a head of hair.
But Fix-Up boss Ricky Wong Wai-ki reckons the HK$70,000 machine is well worth the investment.
Since installing eight of the hi-tech devices at his chain of six salons in 2011, he has been able to employ 18 fewer people. "I used to employ six people in each salon to wash hair. Now, I only need three."
And unlike employees, Wong adds, "machines never get upset".
Small businesses in Hong Kong are embracing automation and digitalisation as never before. The shift, which has gathered momentum in the past two years, is driven by manpower shortages and increased labour costs stemming from implementation of the minimum wage.
Wong says going automatic was a last resort.
"It was never my aim to replace people with machines. I have been forced to do so. It was very difficult to get junior staff after the minimum wage came in. I used to pay [shampoo assistants] HK$5,000 a month, but after that I had to pay between HK$8,000 and HK$10,000.
"Washing hair is a tough job. Assistants are on their feet for up to 10 hours, and must do menial chores like sweeping the floor. Some develop blisters on their hands from prolonged contact with water.
"With the minimum wage, they would rather take more comfortable jobs - as a security guard, for instance."
His job ads placed with the Labour Department no longer drew responses. So when Wong learned about the machines - first used in elderly care homes where labour shortages were even more acute - he decided to give them a go. The trial worked so well, he bought seven more machines. Many other salons have also installed the units, Wong says.
A similar shift has been occurring in the dining scene: Simon Wong Ka-wo, president of the Federation of Restaurants and Related Trades, says many restaurants have digitalised or automated services to help reduce labour costs.
At a Chinese restaurant in Happy Valley that he frequent, for instance, diners now make their selection from menus on iPads, and the order is sent electronically to the kitchen. This allows the restaurant to hire fewer people as they need just enough waiters to bring dishes to the table.
"When you finish dining, you go to the cashier to pay by Octopus. Unlike before when lots of waiters milled around, the 3,000 sq ft dining area has just one manager and two to three servers," Simon Wong says.
"After the launch of the minimum wage, we were faced with a problem. On one hand, automation replaces people and pushes up unemployment rates. On the other hand, restaurants find it difficult to get staff to fill basic posts."
Wong estimates the catering industry, which previously employed 230,000 people, has shed about 30,000 jobs as business owners sought lower-cost alternatives after the minimum wage came in. Set at HK$28 per hour when introduced in May 2011, the minimum wage was this year raised to HK$30.
Census and Statistics Department figures show that 14,800 people, representing 5.8 per cent of catering industry workers, were unemployed between March and May, up from 12,000 people, or 5.2 per cent of workers, in the same period last year.
Difficulty recruiting people to wash dishes gave restaurateurs Alex Liu Ka-po and Ricky Au Wan-kit the idea two years ago to set up a central dishwashing company - and it's proved to be a winner.
The pair were so short-handed at the time "we had to wash some dishes ourselves," Liu says.
So the partners set up Diwash, which now operates two plants in Siu Sai Wan and Chai Wan, both equipped with large machines which can wash even fragile glassware.
"Only the airport uses such a large washing machine," Liu says. "In my restaurants we used to have an eight to 10 per cent depreciation rate because of breakages by workers. Here in our plant, the rate is three per cent."
They employ 30 people who first sort the tableware and cutlery, remove food residue and give the dishes a cursory rinse. The plates and bowls are then placed in the machine and cleaned using superheated steam."
Diwash's clientele has grown from three restaurants to 50. Customers first make a one-off investment to buy an extra set of tableware and cutlery. Dirty dishes are placed in containers and collected for washing each day, with a clean set sent back to the restaurant the following day. For restaurants with a high daily turnover, retrieval and drop-off are done on the same day, Liu says.
"We never intended to replace dishwashing staff, who we respect a lot. But we had no option: not even one person came for interviews when we placed job ads in the newspapers," Liu adds.
Business at the central dishwashing company is so brisk they will open a third plant in Kwai Chung next month.
Another trend gathering pace in the catering industry is restaurant chains setting up central kitchens to serve individual outlets.
"Cooking procedures like stewing brisket are done in the central kitchen instead of in situ," Wong says.
Café de Coral, for instance, opened a HK$600 million central food-processing centre in Tai Po Industrial Estate in April, after starting a plant in Guangzhou in 2011.
"Centralisation of food production can ensure efficiency, food safety, consistency and economy of scale," a Café de Coral spokesman says.
The fast-food chain has also installed machines at some outlets that allow diners to make orders and pay for them electronically, dispensing with a cashier.
Similar devices have been installed in canteens at City, Chinese and Lingnan universities as well as the Hong Kong Institute of Education.
Everich Business System, which specialises in electronic systems for the catering industry, developed the software.
Its sales manager, Chan Yee-cheung, says the machine can be programmed to take some individual specifications, for instance, instructions for more rice or less sauce. Such a machine, which would cost more than HK$30,000, is linked to the kitchen.
They have long been used in Japan but only recently took off in Hong Kong, Chan says.
"Our clients include staff canteens and small Chinese noodle shops. It can help cut down on cashiers. The food kiosk can automatically alter the menu at different times."
Property managers, too, have been going electronic to reduce staffing pressures.
Alkin Kwong Ching-wai, president of the Association of Property Management Companies, says more high-end residential estates have installed Octopus systems for residents' entry.
"We are short of about 300 people. The use of the Octopus system, together with installation of more closed-circuit televisions [CCTV], can allow managers to cut down on security personnel," Kwong says. "Instead of having several people guarding various exits and making floor patrols, you just need one person monitoring all the CCTV."
At some blocks, residents must insert an electronic ID card to activate the lift, while other building managers are exploring access systems that rely on phone apps or facial recognition.
But Kwong concedes tenants may find the latter annoying. "They might not like to stand still for faces to be scanned by a machine. The use of such biometric information can also raise privacy issues."
Alex Tsang Sze-lung, assistant professor at the Baptist University's Business School, says the introduction of the minimum wage has been a catalyst for further automation.
"Automation has always been with us but minimum wage has sped up [adoption]. The phenomenon is a double-edged sword. On the plus side, it helps reduce labour costs and standardise delivery of services."
However, automation also removes flexibility and makes it harder for a company to build a rapport with its customers, so there's a limit to relying on machines, Tsang adds. "People need interaction with each other."
Knowledgeable and friendly serving staff make a big difference to the customer experience in any decent establishment, says Ricky Au, who operates six restaurants.
"If everything is done by machine, why not just eat at home? The automation trend will only accelerate in Hong Kong, with low-skilled jobs being phased out."
Unless they get some suitable training, poorly educated workers will be left in the cold.