Hong Kong business sector, lawmakers hail minimum wage formula, but economist warns over risks of potential price spiral
- Proponents say formula provides ‘objective data’ in determining wage level, which is a long-standing source of dispute between business sector and unions
- Economist Dr Lee Shu-kam warns measure could trap city in a wage-price spiral, with SMEs bearing brunt
Hong Kong’s business sector and lawmakers have welcomed authorities’ bid to link the minimum wage with inflation and economic growth, but one economist has warned the measure may trap the city in a wage-price spiral.
The Post learned on Monday that the minimum wage would be raised by HK$1.80 to HK$41.80 (US$5.34) per hour, with a new formula that would not allow cuts in the level.
While unionists claimed an initial victory in the minimum wage war, the business sector called for the speedier import of workers to offset the anticipated increase in costs.
The new formula for minimum wage levels would also consider factors such as consumer price index (A), current gross domestic product growth and average GDP growth in the past 10 years, an insider said.
The consumer price index reflects changes in the cost of goods and services generally bought by households. Index (A) relates to about 50 per cent of households in the city, which are in the relatively low expenditure range.
The insider said the wage level would also be reviewed annually, rather than every two years as in the past.