Saturday, June 18, 2011

Jury still out on HK minimum wage

Jun 17, 2011

Pay goes up for some workers but employers also find ways to get round the new law
By Lee Choo Kiong

WHEN the announcement of an impending pay rise came, it put Madam Lui Ping Zyu on tenterhooks. Instead of looking forward to a higher salary, she started fearing that she could lose her job.

That was last month, when Hong Kong's statutory minimum wage kicked in, mandating employers pay all workers at least HK$28 (S$4.50) an hour.

'I was happy when it was first announced,' recalled the 50-year-old laundry worker. 'But then I wondered if my boss would resort to reducing staff benefits to cut costs.'

Fortunately, she kept her job, and saw her pay go up from HK$6,000 a month - which was based on an hourly rate of HK$20 - to HK$7,000 now.

Although Madam Lui lost some benefits, like paid rest days, said she is still better off with the Minimum Wage Ordinance, which the Hong Kong government introduced to improve the lives of hundreds of thousands of workers struggling at the lower rungs of society. Many blue-collar workers like her have benefited similarly. Security guards, for instance, have seen their salaries shoot up by HK$2,000 overnight from around HK$6,000.

But, as Madam Lui found out, the new minimum wage rule has brought worries of its own, for employees as well as employers. Industry players told The Straits Times that it is upsetting the fundamentals of Hong Kong's job market.

'Fresh graduates take home about HK$10,000 a month, which is close to what a poorly educated guard earns under the new policy. Is this fair?' said an industry watcher. 'When income does not commensurate with skills, the society will be bogged down.'

Employers have also found ways to get round the law, often to the detriment of workers.

'These days, more companies on the Hong Kong Labour Department's job-matching website are advertising cleaning jobs that pay exactly HK$5,824, which they derive by multiplying HK$28 by eight hours by 26 days,' noted Mr Mark Kwok, the labour affairs organiser at the Neighbourhood and Worker's Service Centre, a political group offering help to workers.

'But during the interview, they tell the candidates that they must report to work 30 minutes earlier to 'prepare', and knock off 30 minutes later to 'clean up'.'

Some are hiring more part-timers or 'freelancers' - essentially employees told to set up shell companies to do the same work for their old pay.

Disabled workers have been among the hardest hit. Before, their biggest edge over able-bodied counterparts was that they were willing to be paid below the market rate. But now, many are being shunned or even sacked, said Mr Cheung, webmaster of, a job portal for the needy and disabled. He declined to give his full name.

The government has, however, defended the new minimum wage law, noting that it has improved the earnings of hundreds of thousands of workers who used to draw less than HK$28 an hour.

According to figures from the Census and Statistics Department, there were about 273,800 workers in this category in the second quarter of last year.

While the Labour Department is reported to have uncovered six cases of workers being underpaid between June 1 and 7 - after the new law came into effect - the number of part-time vacancies has not risen significantly. There were 9,607 part-time vacancies in the private sector in April, which made up 16.4 per cent of the job market. It rose about 5 per cent to 10,113 last month, but that made up a smaller proportion of overall vacancies, at 15.3 per cent.

But some industry analysts are optimistic that employers will adapt to the new law - without breaking it. It is common, said Mr Vincent Koo, managing director of JobsDB Hong Kong, for bosses to take a 'cautious approach' at the initial stage.

He added: 'At this moment, employers would still be willing to maintain the existing labour force or increase headcount as the economy is picking up.'

Additional reporting by Jason Ou

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