Hong Kong is one of the last hold-outs against a minimum wage. When the government's last-ditch stand, a voluntary 'wage protection movement' for low-paid cleaners and security guards, failed to get employer support, there was little alternative to making good on the chief executive's promise to legislate if necessary.
While debate continues about Donald Tsang Yam-kuen's role in the breakthrough in political development for the 2012 elections, it could be the minimum wage that secures his political legacy.
Initially much will depend on the level at which the minimum is set. Passage of the legislation at the weekend reignited passionate argument about that. Employers warn that if the rate is too high businesses will close and thousands of the lowest-paid will lose their jobs. Labour unions say that if it is set too low, hundreds of thousands will remain condemned to a life below the poverty line.
The facts, according to the latest available figures, are that some 440,000 people, or 17 per cent of workers, earn less than the HK$33 minimum sought by unions, which would give them about HK$6,500 for the city's median monthly 192 hours of work. Some 130,000 earn less than the HK$24 sought by many employers, or about HK$4,600 a month. This is in a city that ranks seventh out of 181 economies in per capita income, yet where one in nine people, or 846,800 out of 7.1 million, are in extreme financial need, according to recent figures from the financial secretary's office.
These numbers reflect a widening rich-poor gap, not a fair society. A minimum wage of HK$24 an hour will benefit a relatively small number of people and not make much difference to their lives. But a higher rate has to be one that companies can pay. Given that it will be set for two years, the commission can afford neither to play it safe nor to take a gamble. That said, Hong Kong also needs to focus on longer-term problems in the labour market, such as education and training to lift the earning power of the low-skilled, as well as a wage structure that interfaces sensibly with welfare assistance. People on welfare must be empowered, as well as encouraged, to find work.