HK may introduce minimum wage;
Voluntary measure fails to get bosses to pay decent rates

GREATER CHINA NEWS

Jane Moir In Hong Kong

POLICY-MAKERS in Hong Kong are under renewed pressure to introduce a minimum wage level after an attempt to make companies voluntarily adhere to decent salary structures has failed to bite.

The government fired a warning shot last week at employers who continue to pay dismal wages, particularly in the cleaning and security guard sectors, saying it may legislate if things do not improve.

A Wage Protection Movement was set up in October last year, which encourages employers to pay at least the market average wage for particular sectors. And the government has committed to reviewing this measure before considering a minimum wage law.

However, Secretary for Economic Development and Labour Stephen Ip told lawmakers last week that should the voluntary compliance approach fail, the government will start the preparatory work before the final review is completed.

Labour groups have been highly critical of the voluntary approach, pointing to little improvement for lowly-paid workers. The issue was a hot spot for Donald Tsang during his election campaign, with disgruntled workers taking to the streets as part of a general democracy protest the previous weekend.

Moreover, economic conditions are making it politically difficult to refrain from a minimum wage law: the current jobless rate is at 4.3 per cent, the lowest level in eight and a half years. In the meantime, the wage gap between the wealthy and the lowest-paid workers continues to widen.

Businesses have long resisted a minimum wage in Hong Kong, arguing that it would take away the city's competitive edge.
The truth is Hong Kong is an expensive place to operate, explains Bank of East Asia chief economist Paul Tang Sai-on. Most labour-intensive businesses have already moved across the border to take advantage of cheaper wages. What's left (in Hong Kong) is low-end service jobs, he says.

With these jobs already under pressure from migrants who are willing to work for lower pay, it is pushing salaries further down. So there is a very large number of low-skilled workers chasing after not-so-many low skilled jobs here, he stressed.

One solution may be for a minimum wage to be introduced in certain sectors such as cleaning work. These workers have grabbed the headlines in recent years for notorious pay levels, some earning just HK$7 (S$1.36) an hour.

The improved economy does however seem to have reduced the number of labour disputes, which dropped 4 per cent last year compared to 2005.

Most disputes (70 per cent) are eventually settled, according to the Labour Department, while the number of days lost due to strikes was just 0.02 per 1,000 salaried employees.

The government has also been taking measures to curb wage defaults. In 2006, a record high of 785 convictions were secured for failure to pay wages, an increase of about 34 per cent over the previous year.

Meanwhile, the burden on the Protection of Wages on Insolvency Fund which compensates workers for wage defaults was lessened, with applications declining by 24 per cent compared to 2005.

March 25, 2007