Standard working hours could cost employers HK$55b

Employers will need to pay out up to HK$55.2 billion more a year in wages if standard working hours are introduced in Hong Kong, a long-awaited government report says.

The report, of a study carried out by the Labour Department last year and finished earlier this year, also suggests that such a law, together with a statutory minimum wage, would significantly weaken the flexibility of firms to adjust and rebound during difficult times.

"There will be a huge impact particularly to small- and medium-sized enterprises. This is because there are still underlying worries as far as economic prospects are concerned," Secretary for Labour and Welfare Matthew Cheung Kin-chung said.

But he added that the government did not have a preconceived stance on the matter and it was important to have consensus in society on whether standard hours should be introduced.

The department generated 27 scenarios of the likely impact by altering three elements: a 40 to 48-hour week, overtime pay of one to 1.5 times regular pay and exemption criteria for staff such as managers and executives.

Depending on the scenario, it estimates the employers' additional labour costs at HK$8 billion to HK$55.2 billion a year, or 1.7 per cent to 11.4 per cent of total expenditure on wages. This compares with HK$3.3 billion a year resulting from a minimum wage of HK$28 an hour.

The report says that 1.32 million to 2.38 million workers will be affected if standard working hours are set at 48 or 40 hours a week respectively.

Standard working hours practised in 12 countries and cities including Britain and Singapore were also analysed.

"Experience in other places shows that [standard working hours] may eventually bring about fragmentation of work and under-employment, if employees have to involuntarily work fewer hours due to ensuing adjustments in the labour market structure with an increase in part-time or casual jobs," it says.

Cheung said the government could not simply take a country's model and apply it to Hong Kong because the service-oriented city has a unique structure.

He said a committee would be formed in the first quarter of next year to look further into standardising work hours. It would comprise representatives from employers, employees, academics, commercial interests and the government.

Assistant Commissioner for Labour (Policy Support) Nicholas Chan said the practice had different impacts in different countries. In South Korea some manufacturers had shifted factories to other countries after standard hours were introduced.

Meanwhile, the report shows that Hongkongers work 47 hours a week on average. Of the 2.81 million workers in the city, 23.4 per cent have worked overtime but only 51.8 per cent of these have been paid for the extra time.

Confederation of Trade Unions chief executive Mung Siu-tat called the report a "serious exaggeration".

"It did not take into account the general well-being to society brought about by the scheme, like better health of employees, family relationships and less juvenile problems," he said.