Standard hours for Hong Kong workers will drive up inflation by two percentage points, government economists predict
Last year's figure of 4.4pc could rise to 6.4pc as overtime bill soars, and bosses may then sack thousands to cut overheads, economists predict
Inflation will be driven up by two percentage points and thousands of people may lose their jobs if working hours are standardised, government economists forecast.
The findings were presented yesterday to the Standard Working Hours Committee, which is studying the likely effects of introducing such a policy.
The economists generated 27 scenarios by altering three elements: workers' monthly salary, the number of hours they work until overtime is paid, and the level of overtime pay.
"We have tried to use an econometric model to crudely estimate the potential impact of inflation under the 27 combinations," said Desmond Hou Ka-chun, the government's principal economist.
If the regulations apply only to those making HK$15,000 a month or below, with the standard working hours set at 44 a week and beyond that an overtime rate of 1.5 times the standard hourly rate, the inflation rate would be pushed up by two percentage points as a result of increasing staff costs.
The inflation rate last year was 4.4 per cent.
About 11,600 workers could be laid off under this scenario as employers seek to lower costs.
But Chau Siu-chung, a unionist and employee representative on the committee, cast doubt on the accuracy of the estimates.
"The government economists told us at the meeting that the inflation rate in 2010, before the statutory minimum wage was introduced, was 2.9 per cent. After it was introduced in 2011, they said inflation was pushed up to 5.6 per cent," Chau said.
"But when I asked how much of that 5.6 per cent was actually pushed up because of the minimum wage regulation, they said it was not possible to find out."
He said that even if the inflation estimates were accurate, this did not mean working hours should not be standardised.
The government economists have also forecast that bosses could face an extra wage bill of between HK$103 million and HK$10.3 billion a year, and about 7,000 profit-making companies could slip into the red. Workers would enjoy pay rises of 0.7 per cent to 9.5 per cent after calculating overtime payments.
Dr Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research, said it was impossible to work out accurate estimates because Hong Kong's economy was easily affected by the global economy.
But he said that even if standardised working hours fuelled inflation, the effects should last only one or two years.
A panel commissioned by the committee found that 23 per cent of workers toiled for 51.5 hours a week or longer.
Unions have long been pressing for a working week of between 40 and 44 hours, with workers paid 1.5 times their usual wage rate for overtime.
