Speech on Motion on Minimum Wage

Since launch in May last year with a minimum hourly rate of $28 as starter, the Minimum Wage System has been well run. Wages of workers are notably improved. Most businesses are still surviving, though incurring higher overheads. The Minimum Wage Committee has recently reviewed the statutory rate and agreed to revise it to $30 per hour after extensive deliberations. Endorsement of the Chief Executive is awaited.

In my view, credit should be given to joint efforts of workers, employers and the Government for its launch and their latest deliberations to update the wage rate. We would not have made it without their understanding and reconciliation. In fact, the Minimum Wage System has comprehensive opus operanti. The statutory rate is reviewed every two years to ensure that it is reflective of the market trend and acceptable to both workers and employers. In deliberations, the Committee would consider views of workers and employers as well as overall impacts, including inflation, operating costs and unemployment, etc. Therefore, recommendation is only made after thorough considerations, and it must be creditable.

Today, a learned Member moves to ask CE to exercise discretion and increase the minimum wage rate to $33 per hour. Frankly, this is unilateral thinking. If workers insist on asking for $33, employers might also insist on freezing the rate at $28. In the end, there would be no deal. The Minimum Wage Committee is set up to serve as a forum for mutual understanding and reconciliation between both parties. Employers should know the wish of workers. Workers should realize the hardship of employers. When they reach a consensus, the proposed rate would be acceptable to both. The Minimum Wage System would not be sustainable without such spirit.

In my view, we have elaborated “rules” and all should be abided by them. It serves no purpose for any party to renew its bid. As the Committee has reached a consensus already, it is objectionable to reopen the case. If consensus might be overturned unilaterally, it would set a very undesirable precedence. There would be no mutual trust for future discussions.

In fact, a bundle of factors are considered in setting the minimum wage rate, including the economy. Hong Kong is facing economic downturn in the wake of global depression. If the minimum wage rate is too high, small and medium businesses would hardly survive when the economy goes bust. On the other hand, minimum wage has unexpected results. A collateral effect is much higher increase in payroll than anticipated. When wages of the general grade are adjusted, they would knock on the middle grade. Thus, wages of higher grades would require adjustments also to keep wage gaps. Therefore, any adjustment proposal should be considered in its totality. If not, outcomes would be understated. As for biannual reviews, in my view, pros and cons of the system are yet to be fully known after just one year of operation. It is more desirable to allow it operate for a prolonged period before carrying out a comprehensive review.

I believe that there is no better way to get better pay for workers than getting a better economy. Workers then would have stronger causes for increasing the minimum wage rate that employers could hardly resist.

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