Minimum wage back on Hong Kong agenda
Updated
Hong Kong is once again considering introducing a minimum wage, with draft legislation due to be debated later this year.
It's not the first time the issue's been debated in Hong Kong but the prospect is looking more likely this time round.
Presenter: Bo Hill
Speakers: Lok-sang Ho, professor of economics, Lingnan University
HILL: Workers are guaranteed a minimum wage in 90 per cent of the world's countries, but not in Hong Kong. An attempt to get one instated was turned down by the government in 1999. Economics professor Lok-sang Ho, from Lingnan University, says the argument against is, don't try to fix what isn't broken.
HO: There's a very strong opposition against it from the business community and also a number of free market economists also have expressed objections against it on the grounds that it is counter to the philosophy of laissez-faire which Hong Kong has followed for many, many years and has so far produced very impressive results.
HILL: These impressive results, however, have created a Hong Kong that the International Labour Organisation says has one of the highest rates of inequality in the world. In a city where the 40 richest people are worth at least a billion dollars each, 150,000 people live on less than 13 dollars a day. A 2007 ILO report on workers' rights in Hong Kong noted that the main cause of poverty there was not unemployment but low wages. Professor Lok-sang Ho again.
HO: The income disparity problem is very serious and low income earners are really not earning enough for their daily living and as a matter of fact it is quite possible that people on the Comprehensive Social Security Allowance get higher income per month then a worker who spends a long time working.
HILL: Professor Ho does favour a minimum wage... but says he would prefer a wage subsidy scheme - which would benefit those most likely to earn low wages, such as people with disabilities and low-skilled. He'd also like to see another general wage subsidy, offered as a lump sum payment, offset by a progressive income tax. By targeting lower-end wage-earners, Professor Ho argues more money would be left in the pockets of more potential consumers, driving business and creating a more inviting environment for investors. The Hong Kong government has attempted to target low-skilled workers in the past. Two years ago the Wage Protection Movement was introduced - a suggested minimum wage for security guards and cleaners. It was meant to pull these workers up from the poverty line. But it was voluntary for employers, and Professor Ho says it was a failure.
HO: It has not worked, it is very clear that this kind of voluntary system is not going to work because there is very little incentive for people to follow that. As far as I know only a very small minority of workers have benefited under the scheme and it's not working.
HILL: There is a minimum wage of sorts in Hong Kong - for foreign domestic workers. But that system's also turned out to be flawed. In the last decade it's been cut by more than 10 per cent - as the scheme suffered economic fallout from the SARS epidemic and an economic recession. Whether an across the board minimum wage is less vulnerable to market forces remains to be seen. Draft legislation is due to be debated again later this year and some legislators are publicly pushing for a minimum wage of about 4 US dollars an hour to be introduced as soon as possible. Professor Ho says a decade on from the last vote, the changed face of the Hong Kong legislature could prove more open to the idea.
HO: I think there is a good chance actually, because at least two members of the Executive Council, including the Convenor, have expressed support for it so there is a good chance.
