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Hong Kong economy

Latest increase in Hong Kong’s minimum wage will benefit only half as many workers as previously thought

  • The rise of HK$3 per hour, which comes into force on May 1, will apply to only 75,500 employees, rather than 150,000
  • A strong labour market and higher wages mean fewer workers will get a lift than with previous increases
PUBLISHED : Saturday, 12 January, 2019, 7:33am
UPDATED : Saturday, 12 January, 2019, 9:33am

The record increase in Hong Kong’s minimum hourly wage, by HK$3 (US$0.38) this year will benefit only 75,500 low-paid employees, or half of how many were originally estimated, it was revealed on Friday.

Priscilla Wong Pui-sze, chairwoman of the government-appointed Minimum Wage Commission, explained that the previous estimate of 150,000 workers who would get a pay rise if the level was raised to HK$37.50 per hour was based on data from 2017.

But she said the actual number was halved when last year’s data was applied, a change that reflected more people being employed and paid better during the period.

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The Executive Council on Tuesday endorsed raising the minimum hourly wage from the HK$34.50 set two years ago to HK$37.50 starting from May 1.

While there were calls for the commission to further raise the wage given the robust labour market, Wong warned of the need to balance the impact.

“The minimum wage provides a floor, not a peg to the actual salaries. The minimum wage is not social welfare either. We have to make sure that under the new rate, the basic income level can be protected, meanwhile, there won’t be a great loss of low-paid jobs.”

The increase of HK$3, or 8.7 per cent, this year is the greatest growth the 13-member commission has agreed on ever since Hong Kong launched a statutory minimum wage in 2011, which started at HK$28 per hour.

The rate is reviewed every two years. The figure rose by 7 per cent to HK$30 in 2013, and by a further 8.3 per cent to HK$32.50 in 2015. In 2017, the government raised the rate by 6.2 per cent to HK$34.50.

More than 156,000 employees in Hong Kong were earning less than $37.50 per hour, according to the 2017 survey on annual earnings and hours – the basic data set for the commission’s studies and negotiations over the last two years.

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However, in the commission’s latest report, the number of beneficiaries was halved to between 61,500 and 75,500, depending on the economic growth for the first half of this year.

“We are reviewing the rate once every two years, and society has been changing. More people have a job and their salaries have increased,” Wong said, explaining the drop in the number of people expected to benefit from the new wage threshold.

When the 2017 rate was introduced, only 74,100 employees benefited – nearly 59 per cent less than the 180,000 workers in 2011.

Labour groups have been calling for the review to be done annually to allow the use of fresher data. Wong said the government could consider it, although reviewing it every two years was already a challenge.

“The commission is tasked by the chief executive to review the rate at least once every two years according to the Minimum Wage Ordinance,” Wong said.

“Actually the working time is already quite tight for us.”

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Though acknowledging the current robust labour market, with full employment, in Hong Kong, Wong did not find it necessary for the commission to recommend a bigger pay rise, saying the past increase had improved the income of the least paid.

According to Wong, from April in 2011 to October in 2018, the least-paid full-time employees who formed the first percentile of the salary spectrum had their monthly income increased by 57.3 per cent, which surpassed the inflation by 22.3 percentage points in the same period.