Hong Kong's minimum wage should rise HK$2 to HK$30 per hour, the group set up to review the pay floor has ruled - a decision criticised by both workers and bosses.
Employers say the 7.1 per cent increase will lead to price rises, especially for food, and higher building management fees.
Unions and workers' advocacy groups say it will do little to ease poverty and will soon be eaten up by inflation, which stood at 3.7 per cent last month.
The Minimum Wage Commission will submit its recommendation to the government next month and the Legislative Council must approve the rise. The new rate is expected to come into force in May at the earliest.
The government's Annual Earnings and Hours Survey, released in March, showed 327,200 workers were earning less than HK$30 per hour last year.
The commission agreed to the proposal after its chairman, lawyer Jat Sew-tong, proposed the HK$30 rate to break a deadlock between employers and workers' representatives, according to one of its 13 members. The group has three members representing employers and three representing employees, as well as government officials and academics. One workers' representative on the commission said he had pushed for HK$33, but agreed to compromise at HK$30. Employers had demanded a smaller rise or a freeze at the HK$28 rate set when the wage floor was introduced in May last year.
Sze Ching-wee, a spokesman for the People's Alliance for Minimum Wage, said he was disappointed by the increase, having campaigned for a wage floor of HK$35. He said the HK$2 rise would do little to help low-paid workers due to inflation.
But Lau Kwong-choi, director of the Banyan Group which runs 10 restaurants, said he may have to raise food prices.
"It's not just because of the minimum wage. The minimum wage together with the rent and the food prices have been driving up operating costs," he said.
Brian Renwick, vice-chairman of the Employers' Federation of Hong Kong, said a HK$2 rise was not ideal because the economy was not in good shape.
Iu Chung-yiu, vice-chairman of the Buildings Management and Security Workers General Union, said he expected building management fees to go up.
Professor Terence Chong Tai- leung of the economics department at Chinese University said HK$30 was a suitable rate based on inflation and the needs of employers. "It will be too much for the business sector if the new level is HK$32 or HK$33 - HK$30 is reasonable," he said.
Mainland cities also pushed up minimum wages, to 13.3 yuan (HK$16.30) per hour in Shenzhen and to 14 yuan in Beijing.