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.

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"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."