Keeping it to a minimum: bosses standing firm against rise in Hong Kong’s wage floor as they get set to lock horns with unions

Business owners want any hike in the minimum wage to be less than inflation under the current review, but unions are seeking up to HK$41 so workers ‘can live with dignity’

PUBLISHED : Thursday, 29 September, 2016, 11:13pm
UPDATED : Thursday, 29 September, 2016, 11:13pm

Members of the Minimum Wage Commission are set to lock horns in their final meeting on Friday to determine how much – if at all – Hong Kong’s statutory minimum wage will go up.

Representatives of employees and employers sitting on the commission have been at loggerheads in previous meetings during negotiations on a new level. It now stands at HK$32.50 an hour.

Frustrated by the small increases in the last two reviews, union representatives are demanding that the level, which is reviewed at least every two years, go up to somewhere between HK$36 and HK$41 so that low earners “can live with dignity”, a source with knowledge of the commission’s work said.

But those representing the business sector want the level frozen, arguing that their business costs have already soared since the HK$28 level first became effective in 2011.

Hong Kong trade unionists despair of minimum wage mechanism

“Chairman Jat Sew-tong will throw a figure at the members in the final meeting. Everyone will then give their views and try to strike a balance,” the source said.

The source said that while both sides on the commission appeared to be standing firm, they had told Jat what their bottom lines were – meaning there was room for negotiation.

It is believed the final level will fall in the range of HK$34 to HK$36 – an increase of between 4.6 and 10.7 per cent.

In previous meetings, employers’ representatives argued the city’s economic outlook still appeared uncertain, and so an increase in the minimum wage would make the business environment more difficult.

They also pointed to “ripple effects”, a scenario created when people already making more than the minimum wage also seek a raise.

The source said the unionists wanted the new level to at least make up for inflation, which last month was 4.3 per cent up on the figure a year ago.

A minimum wage? It just won't work

Bosses, on the other hand, are standing much firmer this time than in previous minimum wage level reviews, making it clear they will not accept an increase equal to inflation.

“It is going to be a tough debate,” the source said.

If members of the commission fail to reach a consensus, the body will still have to submit a report to the government stating all the views and concerns of its members. Those members have managed to find mutual ground in the two previous reviews.

The city’s first minimum wage level of HK$28 came into effect in May 2011. It went up to HK$30 in May 2013 and then HK$32.50 in May last year.

In May 2010, the median income of Hongkongers was HK$11,800. The introduction of the statutory minimum wage pushed it up to HK$12,800 in May 2011, and by May last year it stood at HK$15,500.

Further analysis of data from the Census and Statistics Department showed 518,000 people were making less than HK$33 an hour in mid-2011. By the middle of last year, only 54,800 people were making less than that figure.

No one happy as Hong Kong minimum wage raised to HK$32.5 today

“But it has to be noted that the cost of living has gone through the roof over the years,” Confederation of Trade Unions chief executive Mung Siu-tat said.

Census data showed the price of a private property smaller than 430 sq ft in the New Territories soared 21.6 per cent between 2013 and last year.

The price of a live chicken climbed 32 per cent in the same period, and 24 per cent for golden thread fish, a popular kind in Hong Kong.

“The bosses are saying all the time that an increase in minimum wages will drive up inflation and how that’s bad for the grass roots. But it’s the rent hikes that are making lives difficult for them,” Mung said.

Simon Wong Ka-wo, president of the Hong Kong Federation of Restaurants and Related Trades, said costs for restaurant businesses rose 13.5 per cent in the year the minimum wage law was introduced.

The increases in business costs after the last two wage adjustments were smaller than those seen with the introduction of the HK$28 level in 2011, but Wong warned a sharp rise this time may not benefit workers.

“Don’t think you’ll have a lot more money in your pocket if the level goes up, because the level will drive up inflation,” the businessman said.

Still, he said the business sector should not stand too firm on having the level frozen in order to avoid conflicts with workers. An increase to HK$34 would be suitable, he said.

Cleaning Workers Union organiser Wu Mei-lin said the fact the government’s contract cleaners were only paid the minimum wage set a poor example to the private sector.

“The number of working poor families is increasing, and that’s alarming,” Wu said.

The number of such families – households living under the poverty line with at least one member holding down a job – increased by 10 per cent to 190,000 families between 2010 and 2014, according to an Oxfam study.