Commission begins review: Report, recommendations due by October

The Minimum Wage Commission failed to reach a consensus on the coming minimum wage rate after meeting up to review the current rate on Thursday.

Representatives from the business sector insisted on freezing the rate at the current level, while the labor sector rejected it and demanded an increase at least to keep up with the inflation rate.

The commission will meet again next month to seek an agreement.

The Minimum Wage Commission began its review of the statutory minimum wage on Thursday, amid calls by the labor sector for a substantial rise, and gasps from small business operators that a big increase would drive them out of business.

The current minimum wage - at HK$28 per hour - was implemented in May, 2011. But labor groups complained that spiralling inflation had gobbled up the increase for the city's lowest-paid workers. In April, the commission held an eight-week public consultation on the rate.

Secretary for Labour and Welfare Matthew Cheung Kin-chung said the commission, in its review, will refer to a basket of indicators, including economic growth and price changes for basic commodities. Cheung stressed that inflation is only one of the indicators. The commission will submit its report to Chief Executive Leung Chun-ying by the end of October.

Tang Ka-piu, vice-director of the Rights & Benefits Committee under the Hong Kong Federation of Trade Unions, demanded that the minimum wage level be raised to HK$33 per hour. He said as the incoming minimum wage rate will take effect in May, 2013 for two years, it will affect the grassroots for a long time.

Tang also demanded the government review the rate annually, instead of every two years, to address the concerns of the grassroots.

Meanwhile, a local labor group, the People's Alliance for Minimum wage, demanded that the minimum wage be set at HK$35 per hour, saying high inflation has made living standards for low-paid workers even worse.

The group interviewed 318 people during July and August on the minimum wage. The alliance claimed that about 60 percent of the interviewees believed the rate should be set at HK$35 per hour.

Nelson Chow Wing-sun, chair professor at the Department of Social Work and Social Administration at the University of Hong Kong, said the minimum wage has had a positive impact on the grassroots. Nevertheless, he said the rate of increase ought to be based on objective indicators, such as inflation and the growth of the economy.

Chow said the intention of having a minimum wage is to share economic success with the grassroots. Therefore, apart from inflation, GDP growth should also be included as an indicator.

Chow disagreed with the suggestion to review the rate once a year, saying it is not necessary to "review the minimum wage frequently".

He said two years is a better period for statistical analysis. "If it is reviewed once a year, it will cause unrest when the economy goes up or down sharply. For instance, the wage rate would need to be lowered if the economy falls into deflation or when it falls after reaching a pinnacle. Society will not accept a decrease in the minimum wage quietly," he said.

Chow said he thought a HK$35 minimum might be too high - about 25 percent rise above the current level.

"As a matter of fact, this also proves my point that we need a mechanism based on objective data to adjust the level of the minimum wage. Otherwise, it would be an argument in which both sides think they are reasonable," he added.

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