Minimum Wage Policy in Hong Kong

Macy Lee (09428526) Calvin Chung (09409572)

POLS 7050 Public Administration Presentation

History of minimum wage Policies / Laws in other countries

•“sweatshops” in manufacturing industries•1890s :Adopted in New Zealand and

Australia•1909 :Adopted in UK•1938 :a federal minimum wage law

passed by U.S. Congress

Sweatshops

History of minimum wage Policies / Laws in Hong Kong

•1932: Minimum Wage Ordinance (MWO) but hasn’t been used.

•1990’s: Minimum wage discussion started to become a popular topic in society

•2005-2006: Wage Protection Movement (WPM)

•2007: The Wage Protection Movement failed

•Feb 2009: Provisional Minimum Wage Commission appointed

History of minimum wage Policies / Laws in Hong Kong (Cont’d)

Why do we need a minimum wage policy?

Minimum wage as a basic human rights

•Universal Declaration of Human Rights : Article 25

•International Covenant on Economic, Social and Cultural Rights : Article 7

Size of the working poverty group is a concern in HK

•Over 1 million people, which accounts for about 14% of the entire HK population, is classified as part of the working poverty group

•Potentially induces social instability if the sources of their income cannot be protected

Inequality distribution of income in Hong Kong

•Gini coefficient:

1991: 0.476 2006: 0.533;2009*:0.53

(Rank no. 1 in Asia in 2009 from U.N. Development Program, and compare with other developed countries like USA, who has 0.45 Gini coefficient score in 2007)

Minimum wage policy is a world trend?

•Over 100 countries have different types of minimum wage

•PRC, Guangdong Province: implemented its minimum wage system in 1994

However, is this legislation is the best choice for HK people?

Working poor

Social instability

Marginal workers

Existing proposal (WPM) for minimum wage policy

• 1)national-wide

• 2)domestic workers

• 3)clear guidance to determine the wage level

• 4)penalty and implementation plan

• 5)supportive scheme/ subsidy was mentioned in the policy

Hence….. the legislation of minimum wage is needed

However…..

this policy is needed to be adjusted and parallelly implemented with other supportive policies

Policy Objective

Eradicate the working

poverty

Improve the quality of life

for the grassroots

working class

Maintain social

stability

We propose the following modifications,

implemented in 2 phases

2 phases

Phase 1 : 2009-2014

•Provisional Minimum Wage Commission determine the level of the of minimum wage

•Multi-industry / national minimum wage

Phase 1 : How to measure?•Use following criteria to measure

minimum wage :

Cost of living

Consumer price index

Economic performanc

e

Wages of comparable

workers

Phase 1 : Who can protected by?•The minimum wage system applies to

most workers which also includes:

•Domestic worker

•Employees with disabilities

•Trainees and apprentices

Phase 1: Others •Enforcement•Penal provisions

Phase 1: The Supportive Schemes•Enhance the ERB (Employees Retraining

Board) scheme

•Government subsidy – to employer/employee

•Match up policy with “Comprehensive Social Security Assistance Scheme" (CASS)

Phase 1 Evaluation

•1)By annual review index

•2)Annual review unemployment rate and average wage in HK

•3) Minimum wage policy on inflation risk

•4) Investment on-the-job training

Phase 2: 2014-2019

•1) Expand function of the minimum wage commission

•2) Extend the coverage of the minimum wage policy ( e.g. by age, by nature of the job)

•3) Enhance the criteria for determining the minimum wage( e.g. labor productivity, employment rate)

Phase 2 Evaluation

• 1)A 5-year review

• 2)Review economic effect and the cost effect after launch the minimum wage policy

• 3) Review the penalty and monitoring system

Conclusion 1)A Lower social-cost

policy 2) Able to eradicate the

working poverty as well as to bring a minor negative effect to economy

3) For a long-term aspect, this policy can maintain social stability and enhance resource allocation

Worker Boss

Government

Society

Thank You!!

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