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Martin Wong

Paggie Leung

It would  cost about 20 per cent more than the last pay rise for civil servants, an eighth of the price of the new Hong Kong-Guangdong express railway, less than half a per cent of gross domestic product  or about HK$1,100 for each  Hongkonger.
Social scientists say it is equivalent to no more than 'a penny' in terms of the overall economy. Employers say it is 'enormous' and potentially lethal to business. Unions say it is the least they would accept.
Whoever is right about the impact, a statutory minimum wage of HK$33 an hour would cost  a bit over HK$8 billion a year, calculations based on figures from the Census and Statistics Department  show.
A minimum wage of HK$25, which employer groups say is the most that business could sustain, would cost about HK$1 billion a year.
The calculations were made using figures from  a survey by the  department that will be a key factor in determining the statutory minimum wage, due to be announced by the Provisional Minimum Wage Commission  as early as July. 
The Hong Kong General Chamber of Commerce is finalising a submission to the government on a minimum wage of HK$24 or HK$25 an hour.  Several major labour unions have called for HK$33 an hour.
City University political scientist Joseph Cheng Yu-shek  described the impact on the economy, even at HK$33, as negligible and said the rate should be set higher.
'We are talking about a mature and wealthy economy. A pay rise for low-paid workers across the city is in fact just a penny,' Cheng said.
Terence Chong Tai-leung,  associate professor of economics at  Chinese University, agreed: 'Hong Kong is not a labour-intensive economy any more. Labour costs in fact have no great impact on us.'  
Stanley Lau Chin-ho,  deputy chairman of the Federation of Hong Kong Industries, said HK$8 billion a year 'is a very enormous figure' and would have a huge impact on businesses and the economy. 
'I think this will cause companies to reduce their number of staff, and the less competent employees will suffer,' he said.  A minimum wage of HK$30 or above would hit businesses badly, he said. 
But Lee Cheuk-yan,  a unionist legislator who has been pursuing a HK$33  rate, said HK$8 billion was  a small percentage increase in the city's total  payrolls and 'a very small amount compared with the revenue companies are generating every year'.
The  latest  wage survey  breaks down the number of workers earning a specific hourly rate and their median work hours per day. Both full-timers and part-timers are assumed to  work 26 days a month - common at this level of earnings.
A rate of HK$33 would cost employers HK$681.2 million a month more, or HK$8.17 billion a year, and 439,000 workers would get a pay rise.
If all 439,000 workers who earn less than HK$33  an hour work 26 days a month,  they are collectively paid HK$31.7 billion a month, so the increase would be about 2.15 per cent.
At HK$25, the cost would be HK$92.3 million a month more, or HK$1.1 billion a year, with 130,200 workers getting a  pay rise.
In comparison,  the wage increase of 0.19 to 6.3 per cent for 160,000 civil servants in 2008  costs HK$6.8 billion a year, and the Hong Kong section of the express railway to Guangzhou  is budgeted at HK$66.9 billion.  Despite the financial crisis, Hong Kong's GDP  was HK$1.63 trillion  last year,  and economists are predicting growth of 3 to 5 per cent this year.
Chong said workers deserved a wage that would enable them to live independently and in dignity.
'If workers are paid less than the dole, then they can just go  on welfare rather than work. And it means taxpayers paying the bill rather than the private sector,' he said.
Cheng agreed many low-paid workers  would  end up with more if they went on the dole, because they would not incur expenses such as transport, food and working clothes.
Chong said the minimum wage should initially be set at HK$25.
'Big companies with not many low-paid workers  would be OK [with a higher rate], of course. But  for  those small businesses with many low-paid workers, the impact  may be huge,' Chong said.
'We should start with a wage that even small-business employers can accept with ease and slowly increase the wage to HK$33 an hour,' he said.
Cheng, however, said the initial wage could be set at HK33 an hour.  He said the warning  from business groups that shops and restaurants might fold with a high minimum wage  was 'merely bluffing'.
'With the establishment of a minimum wage, it means the wage increase would be  citywide;  the burden  would shift to the entire population. Shops and restaurants can increase prices, and Hong Kong people are willing to pay a little bit more, understanding that decent wages must be paid,' Cheng said.
'And I have never heard of any closure of business due to rising labour costs. What many people in the city witness almost every day is shops and restaurants shutting down because of rental increases,' he said.
'Why do business owners allow landlords to eat into their profits but not share a little bit of earnings with workers who do so much hard work for them?'
Comparing notes
The extra amount per year employers will have to pay if the minimum wage is set at HK$33: HK$8.17 billion
The same sum of money would more than cover the cost of the Kai Tak cruise terminal: HK$8.156 billion
It would also cover the cost of the most recent civil service pay rise: HK$6.8 billion
and is a fraction of the April 1 turnover of the stock exchange: HK$69 billion
The extra amount per year employers will have to pay if the minimum wage is set at HK$25: HK$1.1 billion
That?s less than three times the amount the Hong Kong government spent on the World Expo pavilion and activities: HK$346 million
and less than a third of the cost of the Disneyland expansion: HK$3.63 billion
SOURCES: SCMP, CENSUS AND STATISTICS DEPARTMENT



Minimum wage of HK$33 to cost HK$8b a year