Hong Kong working poor fully deserve better deal under new formula
- Stronger safety net on wages for city’s worst paid and most vulnerable is to be welcomed despite inflation and cost fears
Hong Kong’s lowest paid workers are to get wage rises each year under a new mechanism linked to inflation and economic growth, instead of a review every two years. And they will be protected from a pay cut when the new formula produces a negative result instead of a case for a rise.
That is the good news for the city’s so-called working poor, such as security guards and cleaners.
The not-so-good news is that after receiving their first rise in the minimum wage for four years last year, following a freeze during the pandemic, these workers cannot expect another increase until the current two-year term expires next year. This means the first annual rise will not come until 2026.
Sadly, therefore, they cannot celebrate more money in hand this Labour Day. Admittedly, under the new formula it still would have been only HK$1.80 (US23 cents) more per hour, taking the minimum to HK$41.80 an hour.
That would have done little for the purchasing power of Hong Kong’s notoriously low wage floor. But it would have been better than nothing and probably affordable at this stage of economic recovery from the pandemic.
It is good, though, that the new mechanism just approved by the Executive Council, on the recommendation of the Minimum Wage Commission, will put a more meaningful safety net in place for the lowest paid and most vulnerable workers.
Furthermore, it is good that Hong Kong’s business sector joined with lawmakers in welcoming the introduction of a mechanism linking the minimum wage to the fortunes of the city, while safeguarding it from a downturn that the better-off – most of us – could better withstand.
Legislator Frankie Ngan Man-yu, labour affairs spokesman for the Democratic Alliance for the Betterment and Progress of Hong Kong, the city’s biggest political party, welcomed the pegging of wages to inflation and growth in gross domestic product: “Taking reference of objective data is much better and effective,” Ngan said. “Instead of employers and employees arguing for a minimum wage every year, setting the level based on objective data can also make the wage adjustment more responsive to market changes.”
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That said, Hong Kong is a financial hub facing intense rivalry for investment and innovation. To remain competitive it must strike a balance between the economic interests of employers and labour that ultimately is in the long-term interests of both.
In that regard, concerns about a possible vicious circle of inflation and spiralling costs, arising from annual pegging of wages to prices, may not be exaggerated. But prudence should still leave room to strive for a better deal for the working poor.
