“The cost of living is very high now, no matter how much the pay rise is, I always have to tighten my belt,” she said. “And we always have to wait three years until the contract is renewed to get a pay rise, but that won’t be much either.”

New Hong Kong minimum wage formula to take effect in 2025 as mechanism gets nod

Thirteen years after the statutory minimum wage was introduced, the city’s key decision-making body on Tuesday approved a new formula that bars any rate cuts in future.

The minimum wage, which has risen from an initial HK$28 an hour in 2011 to the current HK$40, will be reviewed annually, rather than once every two years.

The annual review is scheduled to begin next year and take effect in 2026.

However, the new mechanism might not be enough to safeguard the livelihoods of the city’s low-income workers, 19 concern groups warned, while urging the government to raise the minimum wage to HK$50 per hour.

Yip, the cleaner, said her monthly living expenses were now HK$9,000, including HK$3,400 in rent. But she said she was lucky to be supported by the government’s HK$4,000 old-age allowance, and her children occasionally.

To reduce living costs, Yip said she had not dined out for more than three years and shopped at the wet market in later hours for discounted goods.

“Whenever I see a menu, I always think to myself how much money I can save by cooking at home … it’s very tiring, but I am used to it already.”

Kong Chan, a 71-year-old contract street cleaner who works six hours a day and is paid less than HK$10,800 a month, said he was just able to make ends meet.

“When the contract was renewed a few years ago, the company raised my hourly pay by HK$7 only … luckily I only need to feed myself, but those who have mouths to feed are truly struggling, some even ask me to lend them money,” Chan said.

Under a new review mechanism, the consumer price index (A), current gross domestic product growth and average GDP growth in the past decade will be taken into account, to ensure workers could enjoy the economic fruits in good times.

The mechanism prevents any cuts to the minimum wage in times of adversity to protect the low-income workforce. About 17,000 people earn the minimum wage.

Hong Kong business sector hails minimum wage formula as economist sounds alarm

Since its introduction in 2011, the minimum wage has been raised five times and frozen once, with adjustments ranging from 6 to 8 per cent.

The proportion of the working population benefiting from the review of the mechanism had shrunk from 180,000 in 2011 to 73,000 in 2022, which showed the current wage level was “extremely unreasonably low”.

“With reference to experience in other places, we suggested setting the minimum wage level to 50 per cent or two-thirds of the median wage … and that should amount to HK$50 per hour for a starting point,” they said.

The Chinese Manufacturers’ Association of Hong Kong said the new mechanism could increase operational pressure on businesses and urged the government to offer more support to small and medium-sized enterprises.

“The new mechanism may have a ripple effect amid unstable economic growth, high interest rates and the weak outlook of the global economy, and thus impact the pay structure of the labour market and further add to the burden of businesses,” it said.

But the association agreed that the new formula was more transparent and should help to reduce disputes over wage levels.

*Name changed at the request of interviewee.