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Hong Kong economy

Hong Kong’s low-pay industries ‘face HK$2.9 billion hit if minimum wage rises to HK$42’

Labour leaders dismiss complaints, saying city’s lowest-paid should share in wealth they help create

PUBLISHED : Tuesday, 10 April, 2018, 9:01am
UPDATED : Saturday, 21 April, 2018, 9:37pm

Hong Kong’s lowest-paying industries face shelling out an extra HK$2.9 billion (US$369 million) a month to meet calls for a raise to the minimum wage, a commission has said ahead of a public consultation.

Unions and labour leaders have called for the minimum wage to be raised to HK$42 (US$5.40) per hour from the current HK$34.50 per hour, saying such an increase is the only way to guarantee a decent standard of living for the city’s poorest, who should be allowed to share in the city’s prosperity.

The Minimum Wage Commission launched a six-week public consultation on Monday and issued the warning about the likely impact on the low pay sector.

Since Hong Kong brought in a minimum wage in 2011 the amount, originally HK$28 per hour, has gone up every two years. The government will announce the new rate on Labour Day, May 1, 2019.

The increases have always beaten inflation, ranging from 6.2 per cent to 8.3 per cent – or between HK$2 and HK$2.50 – but unions say the rate still does not guarantee a decent standard of living for workers grappling with the high cost of living, especially for housing.

The Labour Party said a new rate of HK$42 would allow a person working a nine-hour day for 26 days a month to earn HK$9,828 – close to what it deems sufficient for a basic standard of living.

This “living wage” was based on Oxfam Hong Kong calculations in 2016 of monthly living costs for a two-person family, taking into account the government’s consumer price index for poor families.

The 15 sectors listed in the commission’s impact study are those where most jobs are low-paying, including retail, food and drink, estate management, security, cleaning, elderly care and courier services.

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vice-chair, said the minimum wage should go even higher than HK$42, as the living wage based on 2016 figures would be outdated.

“Even back in 2015, we found that a working couple would have to earn more than HK$13,000 a month if they had two children and one elderly person to support, meaning that the minimum hourly wage back then should have been HK$40,” Mak said. 

Such a rise would mean an income boost for hundreds of thousands. According to a survey by the Census and Statistics Department, just under 3 per cent of workers in the 15 low-paying industries, or 21,900 people, earn HK$34.50 an hour. But more than a third of workers in those sectors, or 278,500 people, earn between the minimum wage and HK$42 per hour.

Across the city, men got a median hourly wage of HK$75.9 and women HK$60.5, the survey showed.

One in five ethnic minority people in Hong Kong live in poverty

Jonny Ho Kai-man, chairman of the Chamber of Security Industry, said raising the minimum wage to more than HK$37 an hour would have a “great impact” on the companies he represents. A rise of HK$2 to HK$2.50 would be more acceptable, he said.

“Our actual rise in labour costs will be 1.4 times the increment,” Ho, whose chamber covers 27 security companies, said. He said that was because firms also need to cover paid leave and contributions to the Mandatory Provident Fund, the government-mandated pension scheme.

Ho added: “One medium-sized residential complex needs 50 to 60 security guards every day, and about 70 per cent of the management fee paid by residents is for security and cleaning services. The burden on tenants is obvious.”

Catherine Yan Shui-han, convenor of the Environmental Services Contractors Alliance, disapproved of any rise. She said the minimum wage should be “frozen for the public well-being”.

“Cleaning service contractors can’t hire a cleaner with an hourly wage of HK$34.50 given that the market rate has reached between HK$40 to HK$45,” Yan said.

Why can’t frontline workers ever get a bigger share of the profits they work to make?
Samuel Wong, labour leader

“Raising the minimum rate will stimulate inflation and increase people’s cost of living because even those earning more than HK$34.5 would ask for a pay rise.”

Unionists said the employers were being “illogical”. 

“If the market rate is so high, the employers should not worry about the minimum wage being raised to HK$40, because they won’t be able to hire anyone unless they offer, say, HK$42 an hour,” said Chiu Yan-loy, a spokesman for the Property Owners’ Anti Bid-Rigging Alliance, a group formed by property owners to fight rigging in public outsourcing and building renovations.

Samuel Wong Kit-yip, secretary general of the Hong Kong General Union of Security and Property Management Industry Employees, an organisational member of the Confederation of Trade Unions, said workers ought to get a fair share of the city’s wealth.

“Hong Kong has a GDP per capita sufficient to provide fair pay for employees. So why can’t frontline workers ever get a bigger share of the profits they work to make?” Wong said.

Hong Kong’s GDP per capita was HK$360,220 in 2017, a year-on-year increase of 6.1 per cent. By the end of 2017, the government had a fiscal surplus of HK$110.6 billion.