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  • Oct 31, 2014
  • Updated: 5:06pm
NewsHong Kong
LABOUR

Standard working hours could cost employers HK$55b

Bosses would foot big bill under standard working week, report says

PUBLISHED : Tuesday, 27 November, 2012, 12:00am
UPDATED : Tuesday, 27 November, 2012, 4:01am

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.

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mercedes2233
Employers should pay for what they are getting. If the workload is adjusted to standard working hours, and no OT pay is provided, everybody can get off at the end of a normal working day and not need to pretend to work longer hours. Healthier for all.
megafun
so does that mean the lowest paid sector is , and had been , subsidizing businesses to h\the tune of $55 BILLION!!
mcheung
SME employers are taking in HK$55.2 billion annually as extra profit to get richer, on the backs of hard working employees.
Camel
From where you get the idea that the 55.2 billion should be regarded as profits? 55.2 billion means addtional costs for the industry. Those costs needs to be compensated and we know how the companies will compensate their additional costs. With dismissals of employees or changing full time to part time. The best solution is, No OT at all and if in case of special circumstances, then OT should be paid. That's easy and that is how we do it. OT is always a sign that a company is not running efficient and effective. If you can not do your day work/duty in 8 hours and need OT then something is wrong with the efficiency of the company.
mercedes2233
Or something is wrong with the workload.
boondeiyan
What exactly is the unique aspect of Hong Kong's "structure" [I hope it wasn't the editor leaving this ambiguous statement] that prevents the application of standard working hours? We're all eager to find out.
rpasea
I manage a professional services firm and we stopped paying OT many years ago - OT is not common at all in firms like ours. The reason we stopped is people were living in the office to get the OT. It was amazing how "busy" everyone got at 5 pm.
req
Gah! No kidding... Heard a story about a Korean company,they'd come in the weekends, put on their earphones and 'work' over the weekend...
TM
Local HK company: 9 to 6 (but supposed to at least 7:30)
Salary on every 7th next month
Min Insur
7 to 10 Annual leave but should take 3 days on New Year.
Global MNC (Euro): 9 to 6 ( OT will be paid)
Salary on every 25th
Plan B Insur
14 min Annual leave to 25 Days
donniemcm
"would significantly weaken the flexibility of firms to adjust and rebound during difficult times" means asking one poor guy to work for 2 or 3 when the employers is saving money.
Also I'd like to know what is the report target when it mentions 47 hours a week on average.
If you are talking about office people we might be close to reality. But just look at retail and food&beverage industry, I don't think the figure fits in.

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