Minimum wage rise highlights inequality
- May’s HK$3 increase to the minimum wage will bring it to HK$37.5 an hour, far short of the HK$54.70 identified by researchers as what a “living wage” should at least be
- This is a useful reality check on the fairness of a society in which employers enjoy the advantages of low taxes and low wages
Come 2019, the city’s lowest paid can begin counting down the months, weeks and days until they get a rise in the minimum wage of 8.69 per cent in May. Put in those terms, it sounds as if they are winning bigger pay rises than most, until you ask, 8.69 per cent of what? The answer is HK$34.5 dollars an hour. The rise is worth HK$3, bringing it to HK$37.5. If you wonder how poor people can live on that, Oxfam and Chinese University have done some research, based on five focus group discussions with 36 people from poor families, into what a “living wage” would be. The aim was to establish how much they would normally spend on basic necessities such as food, transport and rent, and therefore how much they would have to earn to make ends meet. The answer is at least HK$54.70 an hour, based on 26 eight-hour working days a month (or four six-day weeks plus two days). The study found that basic monthly expenses for a single person were between HK$10,494 and HK$11,548, and or a three-person family at least HK$19,935.
To the extent that people on the minimum wage make ends meet it is only after tax and government support measures. Officials declined to make the minimum wage a “living wage” when it was introduced in 2011. It is now up to employers to make it happen, says assistant social work professor Wong Hung, who conducted the study. Given that the HK$3 rise was only agreed in tough bargaining, and businesses are bracing for a fall in exports to the United States because of the trade war, pigs might fly. But the living-wage exercise remains a useful reality check on the fairness of a society in which employers enjoy the advantages of low taxes and low wages.
The government’s latest Hong Kong Poverty Situation report shows more than 1.37 million people, or just more than 20 per cent, live below the poverty line, adjusted to 1.01 million or 14.7 per cent after taking into account government support. More than 17 per cent of children live in poverty. There may be room for debate about where the poverty line should be drawn, but it is marginal. Such entrenched income inequality amid wealth and massive hoarding of reserves for a “rainy day” cannot be addressed overnight. But it should be an underlying incremental goal every time the minimum wage is reviewed.