The city's buoyant economy has put paid to a doom-and-gloom scenario of businesses being forced to close as a result of the minimum wage, according to an economist and a lobby group for small businesses.
Three months after the Minimum Wage Ordinance set the lowest pay at HK$28 an hour, the unemployment rate remains low at 3.5 per cent, the economy is tipped to grow 4 to 5 per cent this year and an estimated 300,000 low-paid workers have had a pay rise.
'Yes, we can say that the influence of the minimum wage is not as severe as we once believed,' said Danny Lau Tat-pong, chairman of the Small and Medium Enterprise Association. 'The market is in very good shape now. Businesses can raise their prices to offset the increased wages and other costs.'
Small and medium-sized enterprises, which make up more than 98 per cent of the city's employers and account for more than 48 per cent of private-sector jobs, were tipped to suffer after the minimum wage came into effect on May 1.
But City University economist Dr Li Kui-wai said the measure was introduced at a good time. 'The economy is very good now so employers can easily transfer increased costs to consumers,' he said. 'If the wage floor was introduced during an economic downturn there would be a very different picture.'
Li said people had become accustomed to price rises, including increases in fares on the MTR, buses, minibuses and taxis, along with rises in restaurant menu prices.