Improper to raise minimum wage in battered economy, Hong Kong business leader says, warning more unpaid leave could follow move

City’s worst paid make HK$37.50 an hour. In New York, level is HK$116.20 and in Britain HK$64
Federation of Hong Kong Industries chief says decision not to extend wage subsidy scheme also a threat to businesses

Coronavirus pandemic

Phila Siu

Published: 4:53pm, 27 Sep 2020

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Raising the minimum wage would be inappropriate in a struggling economy, a Hong Kong business leader said on Sunday, despite other places increasing what the lowest paid make per hour.

Federation of Hong Kong Industries honorary president Jimmy Kwok Chun-wah defended the sector’s suggestion the benchmark remain at HK$37.50 (US$4.80), and warned more workers could be forced to take unpaid leave, especially now that the government had decided not to extend the wage subsidy scheme.

In contrast to Hong Kong, the hourly minimum wage in New York is US$15, and in Britain, the national minimum wage for adults over the age of 21 has been £6.50 (HK$64) an hour since 2014.

“Some workers already had to go on unpaid leave, while others had their wages cut. It seems inappropriate for the minimum wage level to go up now,” Kwok said on a television programme.

A worker rests in Central. Photo: K. Y. Cheng

Sources said earlier this week that members of the Minimum Wage Commission had failed to reach a consensus on a new level for the index since it was introduced in 2011.

The lack of an agreement meant the ball was now in the government’s court on whether the amount should go up at all.

While commission members from the labour sector called for an increment to at least HK$39, business sector representatives insisted it stay at HK$37.50 or be raised to just HK$38, saying the coronavirus outbreak had battered the economy.

Carol Ng Man-yee, chairwoman of the Confederation of Trade Unions, did not believe more Hong Kong workers would be forced to take unpaid leave, as only about 20,000 out of the city’s 3.5 million-strong workforce – not including domestic helpers – were making the absolute minimum.

Employers push for minimum wage freeze amid economy battered by Covid-19

She accused Kwok of making excuses in pushing for a freeze in the minimum wage.

“Employers are not going to ask their workers to take more no-pay leave just because the hourly minimum wage is going up by HK$1 or so,” she said.

A source with knowledge of the commission’s closed-door meeting said it was only appropriate for the level to go up, as only about 0.7 per cent of the city’s workforce was earning the minimum wage.

“But it was difficult to predict the government’s decision,” the source said.

The commission is expected to submit a report to Chief Executive Carrie Lam Cheng Yuet-ngor by the end of next month. But instead of indicating a new level agreed upon by all 12 members of the commission, as was the practice over the years, sources said the report would just spell out members’ views and other findings.

Minimum wage to jump to HK$37.50, in biggest rise since it was introduced

Earlier this month, Taiwan’s government decided to increase the monthly minimum wage slightly from NT$23,800 to NT$24,000 (HK$6,356), or NT$158 to NT$160 (HK$42) if wages are calculated on an hourly basis.

Taiwan’s minimum wage is higher than in Hong Kong even though the cost of living there is much lower. The provincial general minimum wage in Ontario, Canada, will also be raised from C$14 per hour to C$14.5 (HK$84) from next month.

While Kwok suggested a minimum wage freeze, he said the level could be raised once the economy recovered from the effects of the pandemic.

Earlier this year, the government rolled out its HK$81 billion Employment Support Scheme to pay up to 50 per cent of employees’ salaries, with the monthly subsidy for each worker capped at HK$9,000. But authorities have no plans to extend this measure.

02:58

Calls grow for higher wages and better treatment for Hong Kong’s foreign domestic workers

Kwok said some operators in the city had already changed their business models during the outbreak and were able to survive. But for those still struggling, Kwok said some might have to shut down since the government had decided against extending the wage subsidy programme.

Retail and restaurant businesses had been the hardest hit, he added.

“If the outbreak does not ease, I believe … some firms may ask their employees to take more unpaid leave,” Kwok said.

This article appeared in the South China Morning Post print edition as: ‘now is not the time to raise minimum wage’

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