Property tycoons' grip choking our economy
Representatives of business and industry in the Legislative Council have warned that the minimum wage law might lead to widespread unemployment among low-skilled workers, a reduction in investment or increased automation to replace workers.
Obviously, they were trying to put pressure on the Provisional Minimum Wage Commission not to propose too high an hourly rate when it makes its recommendations to the chief executive next month. They support a minimum hourly rate of HK$24, as proposed by the Liberal Party.
I support HK$33 an hour, as demanded by labour unions.
Opponents to a minimum wage do not have a leg to stand on; their arguments hold no weight because they are based on empty assumptions. We need a few years before we can see the true economic and social effects of the new law. Therefore, we should not overstate the effects and speculate that a certain wage level will have terrible consequences.
Talk of a reduction in investment and the threat of workers being replaced with technology is ridiculous. Following the economic reforms on the mainland, Hong Kong has seen the migration of many labour-intensive industries. Those who needed to move north to cut costs did so years ago.
In a completely free market, resources are allocated only by the forces of supply and demand. But is that the case in Hong Kong?
A recent article in The Economist warned that a minimum wage would mark a further erosion of the city's free-market ways, but the 'free-of-control' era has long since disappeared.
An opinion article in the Hong Kong Economic Journal said recently that because Hong Kong has for many years been operating under a controlled regime and powerful monopolies, it has lost the vitality and willingness in vying for free-market competition. Our ability to compete is so pathetic, the writer said, that our level of competitiveness is like that of a hawker.
I agree that this has directly resulted in the distortion of the functions of our free-market system, and thus it will be useless to blame the minimum wage law. It will be more accurate to say that the minimum wage law will deprive employers of the chance to rip off lowly paid workers.
The law may trigger a spike in unemployment for these people, but free-market advocates who warn of the negative effects of a minimum wage are being disingenuous. They have conveniently ignored the economic reality that the city's free-market economy is being stifled by powerful property developers. The high rents are the major cost of operating overheads, not wages. They should point their accusatory fingers at the property tycoons.
A minimum wage law is not purely an economic issue; it is a necessary policy to achieve social equality and curb widening income disparities. Any economic policy will inevitably create winners and losers. Fundamentally, it's about wealth distribution.
Our widening wealth gap has become a critical social problem, which could lead to instability. Allowing a minimum wage will hopefully give the poor and underprivileged a much-needed breather. Apart from providing social protection, boosting their incomes will increase internal consumption that will ultimately benefit the economy.
The rich and powerful in Hong Kong would do well to understand that giving back to society is a sustainable way forward if they want to continue business as usual.
Unequal distribution of wealth will threaten social harmony and extreme greed-based economics will kill the goose that lays the golden egg.
