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To: Members of the LegCo Panel on Manpower
From: Cheng Yiu-tong, Legislative Councillor

1. Introduction

In some developed countries and regions, there are two ways to regulate wages: fixing a statutory minimum wage; and setting up a standing organization on wage regulation to make periodic regulations and adjustments to wages. In Hong Kong, there should be a wage-regulating mechanism akin to a combination of the above. In 1940, Hong Kong enacted a Trade Boards Ordinance, modelling on the UK Trade Boards Act of 1909. The object of the Ordinance was to empower the Governor to fix minimum wages and overtime rates and determine normal working hours in trades where the wage standards are unreasonably low. The Ordinance was meant to provide workers with minimum protection, but unfortunately it had never been invoked since its passage more than half a century ago. As a result, a lot of needless debates on the rate of wage increase are made every year.

There are five major reasons which caused legislation enacted for more than half a century but has never been invoked to protect the workers. Firstly, the non-intervention policy of the government which eyes any form of wage regulation with suspicion. Secondly, the Trade Boards Ordinance is merely a skeleton which badly needs the flesh of subsidiary legislation which specifies the technical details to make it work. Thirdly, the rationale of the powers of the Governor in convening trade boards is vague. Provisions in the Ordinance can be amended to stipulate the specific criteria with which the Governor may establish a trade board. Fourthly, the Government hesitated to implement this Ordinance for fear that the kind of issues to be determined in a trade board is too sensitive, e.g. fixing minimum wage requirement for particular trades. Fifthly, opposition from the commerce and industry sector. In April 1967, a report prepared by an inter-departmental group led by the Commissioner for Labour advised against the suggestion of providing assistance to low-income workers because this would mean heavier taxes to employers. It can thus be seen that the government could have established trade boards in the 1960s, but had dropped the idea due to opposition from the commerce and industry sector.

2. Recommendations and Actions

As Hong Kong already has a wage regulation mechanism in the form of the Trade Boards Ordinance, it should be utilised. And the best way is to conduct a comprehensive review of this Ordinance expeditiously and in a serious manner. Since the inter-departmental group had looked into issues like the effectiveness of the Trade Boards Ordinance and matters concerning the setting of minimum wage levels, the group’s report may serve as a reference. In the review, considerations can be given to changing the organization of the trade boards in the form of Singapore’s wage regulation model. The Singaporean model is a national committee on wages formed by representatives from the employers, employees and the administration. Each year the tripartite committee will determine wage levels for trades and occupations and propose rates of wage increase to employers. I suggest that the government should set up an inter-departmental ad hoc group to deal with this matter as soon as possible. The government should detach itself from the opinion of Mr. Joseph Wong Wing-ping, the Secretary for Education and Manpower, who at the LegCo sitting on 30 October 1996, stated that the Ordinance was no longer adequate and should be repealed.

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