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Hong Kong economy

What difference will an increase to the minimum wage mean for the lowest-paid in Hong Kong?

As government-appointed Minimum Wage Commission continues six-week public consultation, calls grow for an increase that is ‘not an insult’

PUBLISHED : Saturday, 21 April, 2018, 12:52pm
UPDATED : Saturday, 21 April, 2018, 11:36pm

Yu Mei-wan rarely looks for a job far from her home in a Tai Po public housing estate so she can save money by walking to work and eating at home every day. 

The 62-year-old shopping centre security guard earns the least her employer must pay since Hong Kong rolled out the Minimum Wage Ordinance in 2011. She fears her fate will be like the old women she sees collecting cardboard boxes on the streets to make a living.

“Setting the statutory minimum wage at HK$34.50 (US$4.40) an hour is an insult,” Yu said. “It means a worker can barely afford a meal at McDonald’s after an hour’s work.”

Minimum wage rise ‘will cost low-pay sectors HK$2.9 billion’

Yu, who since 2004 has been a member of the Buildings Management and Security Workers General Union – a branch of the Confederation of Trade Unions – has joined calls for a living wage for low-paid employees. The government-appointed Minimum Wage Commission is two weeks into a six-week public consultation on reviewing the bottom line pay rate.

Based on Oxfam Hong Kong’s 2016 calculations of monthly living costs for a two-person family, and taking into account the government’s consumer price index for poor families, the unions have said a living wage should be at least HK$42 per hour, or HK$9,828 (US$1,183) a month with 26 nine-hour working days. 

As of May 2017, one-third of the workers in the city’s 15 lowest-paying sectors – about 278,500 people – were paid less than HK$42 per hour, including 23,900 security guards such as Yu, according to the commission.

To meet the unions’ call, the existing rate would be increased by nearly 22 per cent – and the 15 lowest-paying industries would need to shell out an extra HK$2.9 billion a month, the commission estimated.

Mak Tak-ching, a Labour Party vice-chairman, said the new minimum wage should be even higher than HK$42, as the living wage based on 2016 figures would be outdated. 

Since the minimum wage was introduced in 2011 at HK$28 per hour, it has gone up every two years. The increases have always outpaced inflation, ranging from 6.2 per cent to 8.3 per cent – or between HK$2 and HK$2.50.

The government is due to reveal a revised minimum wage next Labour Day, May 1, 2019.

My colleagues joke bitterly that the government is giving us subsidies for soy sauce
Yu Mei-wan, security guard

“One review every two years and each time giving us HK$2 more? My colleagues joke bitterly that the government is giving us subsidies for soy sauce,” Yu said.

The mall where Yu works as an overnight security guard is owned by Link Reit, the largest real estate investment trust in Asia. Yu is employed by one of the company’s security services contractors.

On duty for 8½ hours a day, six days a week, Yu earns HK$9,100 per month, which includes four to five days of full-paid leave. 

As of mid-2017, about 3,200 workers in the security services industry – about 7.2 per cent of the industry’s total workforce – were earning as little as Yu, according to the commission.

“The contractors wouldn’t bother giving us a pay rise if there were no minimum wage [legislation] and its rate was not reviewed,” Yu said. She noted some of the lowest-paid guards had to work two shifts a day – totalling 16 to 20 hours – to support their families. 

“I tell them they are not selling labour, but their lives. But they have no choice,” she added.

When Yu started her current job in 2006, she was paid HK$5,500 per month. It took her three years for her monthly wage to increase by HK$500. 

A bigger leap to HK$7,098 a month didn’t take place for another two years, when the minimum wage was implemented for the first time in May 2011.

Johnny Ho Kai-man, chairman of the Chamber of Security Industry, said the actual rise in security companies’ labour costs would be 1.4 times the increase, once things such as insurance and MPF were included. Ho also said a range of HK$2 to HK$2.5 would be more acceptable. The chamber covers 27 security companies. 

Union calls for annual minimum wage review

For Yu, her salary and living costs have been like a race between a tortoise and hare – but one where the hare shows no sign of stopping for a nap.

Since 2011, fares on the MTR have been increased seven times at an average rate of 3.4 per cent, while the composite consumer price index for dining out has increased by more than 27 per cent.

Meanwhile, the average rent for a 430 sq ft flat on Hong Kong Island has gone up by more than 28 per cent to HK$16,120 per month.

“I chose to work in a mall in Tai Po because I live in this district and I don’t need to pay for transport to work,” Yu said. “And many of my industry peers work for the public housing estates they live in so they can save money by having three meals at home.”

Though Yu and her husband, a 65-year-old minibus driver, can earn up to HK$20,000 a month and both of their sons are grown, Yu can’t help picturing herself every time she sees an old woman collecting cardboard from a convenience store at midnight.

“I am so afraid to end up like her … My husband and I have some savings, about HK$200,000 (US$25,490), but how long can that last?”

Although she has been working since she was 12, Yu is afraid to retire. The couple plan to work as long as they can to have more saved to support themselves so as not to burden their children, who have their own families to support.

“Why does the government think HK$34.5 per hour is a reasonable rate?” she asked. “Why can’t it renew the rate every year, just like what it does for the civil servants, instead of every two years? I really don’t understand.”

A spokesman from the Labour Department said the minium wage should be “a floor to protect low-income employees against excessively low wages without unduly jeopardising Hong Kong’s labour market, economic growth and competitiveness or causing significant loss in low-paid jobs.”

The biennial review cycle is considered “appropriate” at this stage because the present mechanism of minimum wage “has been operating to fulfil its objective”, the spokesman said.

From last December to February 2018, the monthly salaries of low-paid full-time employees rose by 23.3 per cent compared with that in February to April 2011 – before the minimum wage was in place, according to the department.