LC Paper No. CB(2)87/98-99(01)

(Translation)

A Research Paper on the Proposal For a Minimum Wage in Hong Kong from the Hong Kong Social Security Society

1 Assessment and analysis of current employment earnings in Hong Kong

1.1 As can be seen from Table 1, the monthly wages of employees in various occupations earning not more than $10,000 a month, which included clerks, service workers, craft and related workers and those engaged in elementary occupations, registered negative growth in real terms in the past five years (from 1993 to the first quarter ("Q1") of 1998). The only exception was plant and machine operators whose wages recorded a moderate growth. The number of such employees totalled 2.06 million, accounting for 65% or two thirds of the workforce.

1.2 Among them, those engaged in elementary occupations were the hardest hit. From 1993 to early 1998, their wages recorded a negative growth of almost 13% in real terms. In other words, their standard of living has declined by 13%, that is to say, at an average rate of 2.6% per year, with the number of affected employees totalling 570 000. With a median monthly wage of $6,000, one can hardly support a typical three-member family.

Table 1Changes in median monthly employment earnings by occupations (from 1993 to Q1 of 1998)


Occupation1998
Q1		1993199419951996199719981993 to Q1 of 1998
No. of
employees
(0 000)		($)($)($)($)($)($)overall
growth in
real terms
(%)		yearly
growth in
real terms
(%)
Managers and administrators24 15,000 20,000 20,000 20,000 28,000 30,000 45.3 9.06
Professionals 16 19,000 23,000 23,000 25,000 30,000 30,000 14.71 2.94
Associate professionals 51 10,000 12,000 13,000 14,000 15,000 15,000 8.98 1.8
Clerks 59 7,000 8,000 8,000 9,000 9,500 9,500 -1.4 -0.28
Service workers and shop sales workers 45 7,000 8,000 8,000 8,500 9,000 9,000 -6.59 -1.32
Craft and related workers 36 7,500 8,000 8,500 9,000 10,000 10,000 -3.13 -0.63
Plant and machine operators and assemblers 29 7,000 8,000 8,000 9,000 10,000 10,000 3.79 0.76
Elementary occupations 57 5,000 5,000 5,000 5,500 6,000 6,000 -12.82 -2.56
Others 9 5,000 5,000 4,000 6,000 7,000 6,000 -12.82 -2.56
Total 317 7,500 8,000 8,500 9,500 10,000 10,000 -3.13 -0.63
Consumer Price Index
(1993=100) 		100 108.08 117.55 124.6 131.76 137.64

Consumer Price Index
(10/94 - 9/95=100) 		86.6 93.6 101.8 107.9 114.1 119.2



Source : Census and Statistics Department

1.3 Given the current high unemployment rate with the number of unemployed workers exceeding 130 000, the wages of many occupations have been adjusted downwards. Moreover, the scarcity of jobs has led to very keen competition in the job market where a single vacancy often attracts many applications (usually over a hundred). Such being the case, employees are subjected to exploitation by employers in the form of reduced wages and benefits, longer working hours and increased workload. Some enterprises have taken advantage of employees' vulnerability by cutting down wage and manpower levels (the so-called down-sizing) even though they are still making handsome profits. As a result, many full-time and part-time workers can hardly support their families with their meager wages, which in turn widens the gap between the rich and the poor and affects social stability.

1.4 According to the findings of the General Household Survey conducted during Q1 of 1998, the number of people earning less than $6,000 a month totalled 410 000 with women accounting for 310 000. These people's standard of living is on the decline and they can hardly provide a decent living for their families. As a result, many employees have been forced to apply for Comprehensive Social Security Assistance ("CSSA"). It is therefore necessary to provide a safety net for those employees earning unreasonably low wages by imposing a minimum wage.

2 Background information about the system of minimum wages

2.1 As early as in 1894 and 1896, New Zealand and Australia introduced their respective systems of minimum wages and established a wages council to protect low-income workers. They were followed by many countries in Europe and America since the early years of this century and up to the 1920s. These countries included the United Kingdom (1909), the United States of America (1912), France (1915), Norway (1918), Austria (1918), Czechoslovakia (1919), Germany (1923) and Spain (1926).

2.2 Some developing countries also enforced legislation on minimum wages long ago. Among them were Mexico (1917), Argentina (1918), Ceylon (now called Sri Lanka, 1927), Costa Rica (1934), Cuba (1934) and Brazil (1938). There were two main reasons for their early enforcement of such legislation: firstly, low income would diminish workers' purchasing power, which would in turn weaken consumer demand and hinder economic development; secondly, workers earning meager wages could hardly make a living, which would inevitably affect social stability.

2.3 These countries mostly established a minimum wage system through legislation to protect peasants, women and low-income workers in the first instance, and then gradually extended its coverage from individual industries or employees to all workers engaged in the manufacturing sector. By the 1930s, many countries already expressly provided through legislation that the states had the responsibility of ensuring a minimum standard of living for all employees. Starting from 1930, the International Labour Organization ("ILO") enacted International Labour Conventions Nos. 26, 99 and 131 one after another concerning minimum wage fixing to promote the system of minimum wages. (See Appendix 1)

2.4 As of the 1990s, a total of 83 countries in the world already ratified the international labour conventions and the system concerning minimum wage fixing, with 17 of them being in Asia, including China (see Appendix 2). Hong Kong has not yet ratified these international labour conventions, but has imposed a minimum wage for foreign domestic helpers and imported labour. In fact, the Trade Boards Ordinance was enacted as early as 1940 in Hong Kong with an objective of fixing minimum wages, minimum working hours and overtime allowance. However, the Ordinance has never been enforced. It is indeed necessary and financially affordable for Hong Kong to fully implement a minimum wage system, in order to maintain a proper international image.

3 The fixing of a minimum wage in Hong Kong

3.1 With reference to the International Labour Organization's Minimum Wage Fixing Convention, we are of the view that, in determining the level of minimum wages, account should be taken of the following criteria:
  1. the needs of workers and their families;

  2. the general level of wages in Hong Kong and the wage level of various occupations;

  3. the level of social security benefits;

  4. the level of employment; and

  5. equal pay for equal work.
3.2 As the imposition of a minimum wage aims at "overcoming poverty and ensuring that the satisfaction of the needs of all workers and their families", the principal consideration should therefore be to ensure that the minimum wage can meet the basic needs of workers and their families.

3.3 In other words, the minimum wage must be fixed at a level sufficient to cover the basic cost of living of workers and their dependent family members, that is to say, the basic cost of living of an individual must not be below the poverty line.

3.4 According to the Poverty Rate of Hong Kong published by the Hong Kong Social Security Society in September 1997, the poverty line was defined as $2,500 per month, which was calculated on the basis of the figures gathered from the 1996 By-census. (This was corroborated by the Census and Statistics Department using the figures gathered from the 1996 Population Census.) Each worker has to support 2.1 family members. (Given that the average household size was 3.3 persons and the average number of working members was 1.6 in 1996, each working member had to support 2.1 family members on average and this figure is generally referred to as the "dependency rate".)

3.5 Therefore, the level of minimum wage should be $2,500 X 2.1 = $5,250 (as at 1996).

3.6 The level of minimum wage in Hong Kong for 1998 can be calculated by making adjustments to the above figure according to inflation. The aggregate inflation rate in 1997 was 5.8% and that for 1998 is estimated at 5%, so the minimum wage for 1998 should be $5,250 X (1 + 5.8%) X (1+ 5%) = $5,832. (For ease of implementation, this figure can be rounded up to $5,850.)

3.7 This level is in line with the international standard under which the level of minimum wage should be between 40% and 60% of the average wage. As the median wage rather than the average wage is employed in compiling statistics in Hong Kong, we can use the median wage to make an estimate. The median wage in 1997 was $10,000. Taking account of the 5% aggregate inflation rate in 1998, the median wage in 1998 should be $10,500. A minimum wage of $5,832 accounts for only 55% of the median wage. Moreover, the median wage is generally lower than the average wage. It is therefore estimated that the above minimum wage only accounts for less than 45% of the average wage, and is considered to be an appropriate and reasonable amount.

4 Minimum hourly, daily and weekly wage

4.1 A 44-hour week is generally accepted in the international community and Hong Kong as well. Given the global trend towards a shorter working week (such as in China where a five-day week system is adopted), it is suggested that a 40-hour week be adopted for calculation. In fact, even if we adopt 44 hours as the weekly working hours, hourly-rated workers will be deprived of the wage for the one-hour lunch time every day. That means they can only be remunerated for 39 hours of work. Therefore, it will be more appropriate to adopt 40 hours as the statutory weekly working hours across-the-board.

4.2 Given that there are four weeks plus 2 working days in a month, the monthly working hours amount to a total of 168 hours (sic). By dividing the minimum monthly wage of $5,832 by 168 hours, we obtain a minimum hourly wage of $34.7 which can be rounded up to $35.

4.3 The minimum weekly wage is $34.7 X 40 hours = $1388, which can be rounded up to $1,400.

4.4 The minimum daily wage is $34.7 X 8 hours = $277.6 which can be rounded up to $280.

5 The minimum wage fixing machinery

5.1 According to the International Labour Convention, the minimum wage fixing machinery may take a variety of forms, including the fixing of minimum wages by the following :
  1. statute;

  2. a competent authority;

  3. wages boards;

  4. labour courts; or

  5. collective agreements.
5.2 As a successful wages policy requires a consensus between representatives of employers and workers in order to secure widespread support for its implementation. It is therefore suggested that reference be made to the National Wages Council systems adopted in Singapore for the purpose of setting up a similar council in Hong Kong, which will be responsible for formulating, amending and modifying the policy on minimum wages in Hong Kong.

5.3 The National Wages Council in Singapore, set up in 1972, is a tripartite body consisting of representatives of employers, employees and the government and is chaired by an independent person (see Note 1). In 1992-93, employers and employees were respectively represented by six members in the Council and another four members were government representatives. The Chairman was a professor of the Faculty of Economics in the University of Singapore. The Council is a high-level consultative body which performs the following functions:
  1. to assist in drawing up policy guidelines on wages;

  2. to propose adjustments in the wage structure for the purpose of attaining a wages system which is in the long-term economic interests of the country; and

  3. to recommend the adoption of reasonable incentives to promote efficiency and enhance productivity.
Any disputes arising in the course of the implementation of the wages system will be addressed by the Ministry of Labour. If they cannot be resolved, they will be referred to the Labour Court for arbitration.

5.4 The relevant wage fixing machinery must also formulate rules and regulations which lay down the definition of minimum wage, its standard level, the protection offered, the supervision required as well as relevant legal obligations. "Wage" is generally defined as the money paid by an employer to an employee for the services rendered and the working time spent on the basis of the terms and conditions of a written or oral employment contract. However, the following must not be construed as constituting a part of the minimum wage :

(1) any money award or reward in other forms offered by employers at their discretion;

(2) pay for overtime work;

(3) subsidy paid under special working conditions; and

(4) relevant social security and benefits offered.

6 The estimated number of beneficiaries under the system of minimum wages

6.1 According to the above level of minimum monthly and hourly wages, we can compute the number of beneficiaries as seen from Table 2.

Table 2Employed persons by sex, monthly employment earnings and hours of work for Q1 of 1998

Monthly employment earnings (HK$)malefemaleTotal
hours of workhours of work
30-3940-49>50Sub-total30-3940-49>50Sub-total
15,6003,3005,3004,50028,70038,50011,50023,200113,600186,900215,600
4,000-4,9007,2002,6008,3006,50024,7008,4006,10020,50023,50058,50083,200
5,000-5,9999,6003,70017,30016,00046,6006,9006,80030,50018,90063,200109,800
100,000308,600408,600

Source : The Census and Statistics Department, June, 1998.

6.2 It is estimated that the number of employees whose income will increase under a system of minimum wage will be about 350 000, accounting for almost 10% of the labour force. Among them, 280 000 are full time employees (that is, with 40 working hours or above) and 70 000 are part-time employees. Among the full-time employees, 230 000 are females and 50 000 are males. Among the part-time employees, 50 000 are females and 20 000 are males. On the whole, the numbers of female and male beneficiaries will be 280 000 and 70 000 respectively.

7 Doubts among the public about the system of minimum wages and the answers to them

7.1 Will the system lead to a decrease in employment opportunities?

7.1.1 Many people are worried that the imposition of a minimum wage will force employers of many small and medium enterprises to take the easy way out by cutting the number of employees, in order to reduce wage cost. This will result in higher unemployment.

7.1.2 According to the theories of labour economics and findings of case studies, as long as the level of minimum wages is kept at or below the market rate for that occupation, adopting a system of minimum wages will not affect employment opportunities or increase unemployment (see Note 2).

7.1.3 The median wage for elementary occupations for Q1 of 1998 was $6,000 while the proposed minimum wage is $5,850, which is below the median wage level, and hence below the average wage level. As such, employment opportunities are not expected to be reduced as a result.

7.1.4 Moreover, the proposed level of minimum wage has been determined on the basis of the poverty line. If the minimum wage is set below this level, workers will not be able to support their families even if they have a job. Therefore, both employers and the Government are under a moral obligation to ensure such a minimum wage level.

7.2 Is the imposition of a minimum wage contrary to the principle of a free market economy?

7.2.1 Some decision-makers are worried that the imposition of a minimum wage will interfere with the market economy to the effect that the wage level cannot be determined by supply and demand in the market.

7.2.2 It seems that the above worries are unnecessary. More than 80 countries in the world have adopted minimum wages. A case in point is the free market economies in Europe and America, where a system of minimum wages was adopted in as early as the first half of this century. As their economies have flourished and grown as ever, this has proved that a system of minimum wages will not affect a free market economy and hinder its growth.

7.3 Will a minimum wage become a maximum wage?

7.3.1 Some people are worried that once a minimum wage is imposed, many employers will take this opportunity to suppress wages on the excuse that they have offered a minimum wage to recruit employees and are unwilling to offer higher wages. As a result, the minimum wage could become the maximum wage for the occupation concerned.

7.3.2 Such worries reflect the inadequate protection offered to workers by existing labour legislation whereby wage levels are arbitrarily controlled by employers while workers have little bargaining power. Even if no minimum wage is adopted, employers will suppress wages all the same. This is something that is actually happening in Hong Kong, as can be seen from the decreasing wages in real terms. The fixing of a minimum wage will at least serve to protect workers and their families by ensuring the satisfaction of their basic needs. Based on a minimum wage, different minimum wages can also be considered for various occupations so as to offer protection to the employees concerned.

7.3.3 The ultimate solution to such an unfair phenomenon lies in the enhancement of workers' bargaining power. Specifically, giving employees the right to collective bargaining will result in a balanced labour relationship and is conducive to reaching agreements between employees and employers with a view to improving working conditions.

8 Merits of the system of minimum wages

8.1 The system of minimum wages serves as a safety net for the purpose of offering minimum acceptable protection for workers and ensuring a standard of living for them and their families under which a decent life is impossible.

8.2 The system can offer direct protection to semi-skilled workers and those engaged in elementary occupations, new arrivals who are relatively advanced in age and female workers by ensuring a minimum wage for them.

8.3 The system can help to slightly narrow the gap between the rich and the poor (see Note 3).

8.4 The system can help to cut down spending on CSSA and prevent low-income earners from falling below the poverty line.

8.5 The system can help to promote the development of high-value added products in Hong Kong and ensure the proper use and safeguarding of human resources.

8.6 The system can help the people of Hong Kong to ride out the storm during a period of economic downturn or recession, and maintain social stability.

9 Recommendations

9.1 The Hong Kong Special Administration Region Government should expeditiously follow Singapore's example by setting up a wages council, fixing the level of minimum wage, ratifying the Minimum Wage Fixing Convention and establishing a system of minimum wages in Hong Kong.

9.2 The Hong Kong Special Administration Region Government should set an example by taking the lead in implementing a system of minimum wages, and require all suppliers and contractors who have concluded commercial agreements with the Government and semi-governmental organizations to undertake in writing to adopt minimum wages for their employees, or else the Government and the organizations concerned should not enter into commercial contracts with them. Withholding the truth and deceit should be treated as criminal offences and subject to penalties.

Notes

Note 1Singaporean Ministry of Labour (1993) National Wages Council 1972-1992.
Note 2McConnell C. R. & S. L. Brue (1995) Contemporary Labor Economics. McGraw-Hill, New York. Ch. 13

Card D. & A. B. Kruegar (1995) Myth and Measurement: The Economics of the Minimum Wage. Princeton University Press. USA.

Bernstein, J. & J Schmitt (1997) "The Sky Has Not Fallen: An Evaluation of the Minimum-Wage Increase." Briefing Paper. Economic Policy Institute. Washington, D. C. USA.
Note 3Lustig N. C. & D McLeod (1997) "Minimum Wages and Poverty in Developing Countries : Some Empirical Evidence" in Edwards, S. & N. C. Lustig (eds.) Labor Markets in Latin America. Brookings Institutions. Washington D. C., USA.


Acknowledgment:



Appendix 1

Recommendation No. 135 of International Labour Conventions (1970)
Recommendation concerning Minimum Wage Fixing, with Special Reference to Developing Countries

I. PURPOSE OF MINIMUM WAGE FIXING

1. Minimum wage fixing should constitute one element in a policy designed to overcome poverty and to ensure the satisfaction of the needs of all workers and their families.

2. The fundamental purpose of minimum wage fixing should be to give wage earners necessary social protection as regards minimum permissible levels of wages.

II. CRITERIA FOR DETERMINING THE LEVEL OF MINIMUM WAGES

3. In determining the level of minimum wages, account should be taken of the following criteria, amongst others:
  1. the needs of workers and their families;

  2. the general level of wages in the country;

  3. the cost of living and changes therein;

  4. social security benefits;

  5. the relative living standards of other social groups;

  6. economic factors, including the requirements of economic development, levels of productivity and the desirability of attaining and maintaining a high level of employment.
III. COVERAGE OF THE MINIMUM WAGE FIXING SYSTEM

4. The number and groups of wage earners who are not covered in pursuance of Article 1 of the Minimum Wage Fixing Convention, 1970, should be kept to a minimum.

5. (1) The system of minimum wages may be applied to the wage earners covered in pursuance of Article 1 of the Convention either by fixing a single minimum wage of general application or by fixing a series of minimum wages applying to particular groups of workers.

(2) A system based on a single minimum wage ?
  1. need not be incompatible with the fixing of different rates of minimum wages in different regions or zones with a view to allowing for differences in costs of living;

  2. should not impair the effects of decisions, past or future, fixing minimum wages higher than the general minimum for particular groups of workers.
IV. MINIMUM WAGE FIXING MACHINERY

6. The minimum wage fixing machinery provided for in Article 4 of the Convention may take a variety of forms, such as the fixing of minimum wages by ?
  1. statute;

  2. decisions of the competent authority, with or without formal provision for taking account of recommendations from other bodies;

  3. decisions of wages boards or councils;

  4. industrial or labour courts or tribunals; or

  5. giving the force of law to provisions of collection agreements.
7. The consultation provided for in paragraph 2 of Article 4 of the Convention should include, in particular, consultation in regard to the following matters:
  1. the selection and application of the criteria for determining the level of minimum wages;

  2. the rate or rates of minimum wages to be fixed;

  3. the adjustment from time to time of the rate or rates of minimum wages;

  4. problems encountered in the enforcement of minimum wage legislation;

  5. the collection of data and the carrying out of studies for the information of minimum wage fixing authorities.
8. In countries in which bodies have been set up which advise the competent authority on minimum wage questions, or to which the government has delegated responsibility for minimum wage decisions, the participation in the operation of minimum wage fixing machinery referred to in paragraph 3 of Article 4 of the Convention should include membership of such bodies.

9. The persons representing the general interests of the country whose participation in the operation of minimum wage fixing machinery is provided for in Article 4, paragraph 3, subparagraph (b), of the Convention should be suitably qualified independent persons who may, where appropriate, be public officials with responsibilities in the areas of industrial relations or economic and social planning or policy-making.

10. To the extent possible in national circumstances, sufficient resources should be devoted to the collection of statistics and other data needed for analytical studies of the relevant economic factors, particularly those mentioned in Paragraph 3 of this Recommendation, and their probable evolution.

V. ADJUSTMENT OF MINIMUM WAGES

11. Minimum wage rates should be adjusted from time to time to take account of changes in the cost of living and other economic conditions.

12. To this end a review might be carried out of minimum wage rates in relation to the cost of living and other economic conditions either at regular intervals or whenever such a review is considered appropriate in the light of variations in a cost-of-living index.

13. (1) In order to assist in the application of Paragraph 11 of this Recommendation, periodical surveys of national economic conditions, including trends in income per head, in productivity and in employment, unemployment and underemployment, should be made to the extent that national resources permit.

(2) The frequency of such surveys should be determined in the light of national conditions.

VI. ENFORCEMENT

14. Measures to ensure the effective application of all provisions relating to minimum wages, as provided for in Article 5 of the Convention, should include the following:
  1. arrangements for giving publicity to minimum wage provisions in languages or dialects understood by workers who need protection, adapted where necessary to the needs of illiterate persons;

  2. the employment of a sufficient number of adequately trained inspectors equipped with the powers and facilities necessary to carry out their duties;

  3. adequate penalties for infringement of the provisions relating to minimum wages;

  4. simplifications of legal provisions and procedures, and other appropriate means of enabling workers effectively to exercise their rights under minimum wage provisions, including the right to recover amounts by which they may have been underpaid;

  5. the association of employers' and workers' organizations in efforts to protect workers against abuses;

  6. adequate protection of workers against victimization.

Appendix 2

Countries that have ratified the International Labour Convention on Minimum Wage Fixing and established a system of minimum wages

Asia Australia, Nepal, Papua New Guinea, Philippines, Turkey, China, Sri Lanka, Fiji, India, Iraq, Japan, Saudi Arabia, New Zealand, Solomon Islands, Sudan, Thailand, Indonesia

EuropeAustria, Belgium, Bulgaria, France, Spain, Portugal, Czechoslovakia, Germany, Hungary, Irish Republic, Italy, Luxembourg, Norway, Poland, United Kingdom, the Netherlands

AfricaAlgeria, Angola, Burundi, Cameroon, Nigeria, Central Africa Republic, Chad, Congo, Egypt, Ghana, Ivory Coast, Kenya, Libya, Mali, Mauritania, Morocco, 0Niger, Rwanda, Senegal, Tanzania, Togo, Tunisia, Zaire, Zambia, Lebanon

Latin AmericaArgentina, Bahamas, Barbados, Bolivia, Brazil, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Mexico, Panama, Peru, Chile, Cuba, Dominican Republic, Jamaica, Nicaragua, Paraguay, Uruguay, Venezuela, Honduras

North AmericaCanada, United States of America


Source :
ILO (1992) Minimum Wages Geneva

(Summary Translation)

Appendix 3

Controversies Over The Fixing of A Minimum Wage

Hong Kong has been plagued by unemployment problems in recent months. In the wake of another wave of financial turmoil, the latest unemployment rate has risen to 4.2%, further exposing the seriousness of Hong Kong's economic crisis. Various political parties and organizations have put forward proposals and demands aimed at stimulating the economy and alleviating the unemployment problems. One of them came from some labour and non-governmental organizations, which calls for setting a minimum wage to protect the interests of workers. At first glance, the relationship between a minimum wage and the unemployment problems is not so obvious and quite a number of queries concerning the merits of imposing a minimum wage have been raised in the community.

The proposal for setting a minimum wage is mainly questioned in three aspects. Firstly, it is considered that the imposition of a minimum wage will increase wage cost and reduce enterprises' competitiveness, leading to a shrinkage of room for survival for small enterprises and ultimately resulting in job losses; secondly, the imposition of wage levels is considered to be contrary to the principle of a free market economy; thirdly, a minimum wage could be counter-productive and might become a maximum wage should it be imposed by law. As a result, those employees with higher incomes could be victimized.

The imbalance in the development of Hong Kong must be addressed

As a matter of fact, those people who hold the above views are still under the illusion that a free market economy is superior to any other form of economy. They therefore assume that the adjustment of wages is essential to cost control, while turning a blind eye to the hardship of grass roots workers. It can be seen from the proposals made by the Government and some political parties that they still cherish Hong Kong's past "success" which was characterized by booming property and stock markets. Successive waves of financial turmoil and unemployment problems have failed to prompt them to reflect on past mistakes, question the mode of unbalanced development in Hong Kong and think carefully about the way forward.

It is apparent that there were unbalanced developments in Hong Kong in the past. Apart from a massive flow of capital into the property and financial markets, resulting in inadequate support for other industries, the unbalanced situation was also reflected in the trend of wage increases for workers. From 1993 to 1997, non-technical workers' wages decreased by 1.18% in real terms. The restructuring of the manufacturing industry has created a group of fringe workers. They are mostly middle-aged workers, women and single parents. Extremely keen competition for a dwindling number of jobs has left them vulnerable to exploitation by employers in the form of reduced wages and benefits. It is quite common to see this group of workers engaged in a 10-hour shift without leave on a monthly pay of $4,000 or $5,000. They could hardly make both ends meet at a time of runaway property prices. However, the Government has shown no concern about their plight. It is no wonder that weak consumer spending has resulted in sluggish business for a wide range of trades at a time when many people are having difficulties in meeting basic needs.

Workers' basic needs must be satisfied

Cutting workers' wages is not the solution to the present business doldrums experienced by many trades, nor can it enhance the room for survival for enterprises. On the contrary, various enterprises should take into account the ever-changing developments in the global economy. If they persist in their "making quick money" mentality and their lack of vision, and indulge only in cutting wage and manpower levels to survive the economic downturn, while the government has resorted to the means of inaction, the vitality of the economy will be further depressed, making life even more difficult for the people and weakening their consuming power to a greater extent. Cutting workers' wages can only create a vicious circle. The imposition of a minimum wage can ensure a decent living for workers. On the other hand, it can also encourage enterprises to turn to more creative solutions, such as adopting new technology and improving management technique, instead of relying on cutting wage and manpower levels for survival in a highly competitive market.

As a matter of fact, high wages are not to blame for the current sluggish business for many trades. The culprit is the Government's lack of vision and its blind faith in the laissez-faire policy. On one hand, the Government has created favourable conditions for property developers by limiting the supply of land, thus guaranteeing handsome profits for speculation in the property market. On the other hand, it has failed to protect and develop one of the most important assets in Hong Kong the workforce. Therefore, the Government should allocate more resources for industrial development and offer appropriate concessions to enterprises, such as rental and tax concessions, as well as encouraging them to train manpower resources, if it intends to genuinely support enterprises and stimulate the economy.

Workers' bargaining power must be strengthened

Regarding the worry that a minimum wage might become a maximum wage, such a worry has again reflected the inadequate protection for workers under existing legislation which enables wage levels to be controlled by employers while employees have little bargaining power. To eradicate this unfairness and prevent employers from using a minimum wage to exploit workers, bargaining power for the latter must be strengthened. To be specific, giving employees the right to collective bargaining will result in a more balanced relationship between employers and employees.

In view of the current high unemployment rate, there should be no more talks on "belt-tightening" and "settle for a temporary job first". What workers need are more specific measures to ensure that their basic needs are met. In fact, the long-term solution to the unemployment problems lies in improving people's livelihood and reviewing the way forward, so as to achieve a more balanced development. It is therefore the appropriate time to strive for the imposition of a minimum wage, which will give recognition to workers' efforts. A minimum wage has been in practice in Europe and America for many years. Even China and Taiwan have adopted a minimum wage. So it is not difficult for Hong Kong to learn from other countries' experience, so as to come up with a formula which is both fair and suitable for Hong Kong, for calculating a minimum wage. This is a matter that the Government should carefully consider and examine.

SO Yuk-yan

Assistant Officer (Programme), Oxfam