• Sat
  • Dec 20, 2014
  • Updated: 11:13am
NewsHong Kong
LABOUR

HK$3 rise in Hong Kong’s minimum wage ‘would cost HK$1.4 billion’

PUBLISHED : Tuesday, 05 August, 2014, 11:45pm
UPDATED : Wednesday, 06 August, 2014, 2:42pm
 

The city's employers will have to fork out an additional HK$1.4 billion a year if the hourly statutory minimum wage goes up from the current HK$30 to HK$33, the Minimum Wage Commission was told.

"It's not a lot if you think about how many employers will be sharing the amount," a person with knowledge of the commission meeting at which the figures were presented said.

The 12-member commission, headed by senior counsel Jat Sew-tong, is expected to submit a report on a new wage level to Chief Executive Leung Chun-ying before the end of October. Leung, in consultation with the Executive Council, is expected to make a decision on the wage by the end of the year.

The business sector wants the wage level to stay the same, but would accept a 6.66 per cent rise to HK$32. Unionists are pressing for a rise of about one-third to as much as HK$39.70. The government told the commission members that the extra costs would be about HK$300 million and HK$790 million if the hourly minimum wage goes up to HK$31 and HK$32, respectively.

The figures had not taken into account "ripple effects", meaning that staff already paid above the minimum wage level would seek more money.

By contrast, the commission said earlier that the additional bill was HK$2 billion when the level went from HK$28 to HK$30 in 2011. But this figure took into account the ripple effects.

A 2012 study on ripple effects, commissioned by the government, pointed out that the median hourly wage in the retail sector increased 10.2 per cent from HK$33.30 to HK$36.70 from September 2010 to a year later.

The source said the commission received about 300 letters during the eight-week consultation that ended in May. Most unionists wanted HK$37 an hour, employers wanted the minimum wage frozen, and non-governmental organisations suggested a rate of HK$34. The source also said that commission members had not yet made clear what wage they preferred.

FOCUS: How many Big Macs could a Hongkonger on minimum wage afford?

"Actually the economic statistics presented by the government do not mean much. At the end of the day it is down to the tug of war between the representatives who have in mind a level they want," the source said.

The Liberal Party's catering-sector lawmaker, Tommy Cheung Yu-yan. said the government's estimates failed to show the whole picture because ripple effects were not considered. Cheung, who had been criticised by unionists for suggesting a level of HK$20 before the law was introduced, now wants the level to stay at HK$30. He said the catering industry did not lay off staff because operation costs increased, as such expenses were transferred to customers.

"The salaries of public estate tenants have already gone up sharply. The minimum wage is supposed to help the low-income families," he said.

"It does not need to go up every year or every two years. Many low-income families are getting paid well above the minimum wage. The commission does not know economics.

"How could the chairman Jat Sew-tong say earlier that the HK$30 level is working fine? Just look at the inflation."

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17

This article is now closed to comments

kctony
What does "..would cost HK$1.4b" mean? So those low wage earners aren't a part of HK?
Tommy Cheung breaths with his head obviously. So he thinks the business would pass the wage increase to the customers but not the rent.
The minimum wage in HK is way too low to be a relevant concern for the economy. Just get a calculator. A business hiring 20 minimum wage earners would cost an extra $12,500 a month. What is $12,500 to any business today?
It is truly a shame that the rent is left unchecked. These wage earners need that $3 raise more than the property fat cats need their 200% rent hike.
Tkorunner
I remembered Tommy has predicted "the end do the world" for the boss every time someone asked for a raising of the minimum wage. Do we still need to listening to his opinion?
sipsip1238
1.4bn across the entire Hong Kong is really not that much, given that the total cost of the almost 6% increase our extremely underworked civil servants are getting most likely already dwarfs that amount; I guess in that case, taxpayers pay and that is ok.
Ok Tommy, you work for 30HKD an hour and then tell us how well paid you are.
53aa1971-a0b8-4de1-a0d4-08df0a3209ca
Do Hong Kong employers think so little of their workers? Shame on them, greed will eat you up and spit you out!
virokick
Other developed countries that have min wages also have strong social safety nets.
One major problem in HK is rents /property prices, period.
caractacus
In the USA minimum wages state by state range from the lowest equivalent of HK$40 to the highest of HK$70 per hour. In the UK it is HK82 per hour for over 21 year olds. HK is no cheaper to live in than the USA or UK, quite the opposite given property prices and rents, excepting the 50% of public housing occupants who own private property and cheat the means test.
$1.4 bn is $200 per head of HK's 7,000,000 population per year, peanuts, but much of the business lobby want to pay peanuts.
It is RENTS that need to be controlled.
53ba0a60-0e20-4b70-bbcb-4c4d0a320968
This $3 lift would be paid to janitors, tealadies, couriers, back-of-house and contract staffs of estate management, eventually translated to marginally higher food and general expense cost, ultimately foot by the the top employers in terms of salary adjustments to workers to absorb the marginal (if at all) rise in the CPI. Would someone help me out here, spread that to the top 30 or 25 employers' annual expense of profit, per capita of employee, that $1.4B wold be 0.01% may be?
Hardly a dent in any case, raise that minimum wage by $7.5 I'll say.
sammckhk
Why do we always hear winges and crying about minimum wage increases but never the same publicity and complaints about high rentals. The burden of rent makes up the greatest costs to businesses such as restaurants does it not ?
Artie
That means $1.4billion more to the economy as the lower paid workers are more likely to spend the increase.
niall1975@hotmail.com
Not surprisingly businesses are more concerned about lining their own pockets than paying their employees a fair wage. It is greed pure and simple. The current rate of $30 is a disgrace to a place that likes to think itself as civilised but is far from it. It should be closer to $40. Instead of pushing on with reforms in employees working conditions and rights we have our leaders and business wasting time signing petitions and telling everyone how the big bad people at Occupy Central will ruin Hong Kong for ever! Sorry guys but you are doing a perfectly good job at that without any help from OCHK.

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