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Following is the transcript (English portion) of remarks by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, on the new wage arrangements for non-skilled workers engaged on government service contracts at a media stand-up today (April 11):
Secretary for Labour and Welfare: With the impending implementation of the statutory minimum wage on May 1, the community is very concerned about the implementation details, practical operation and impact on different sectors of statutory minimum wage. As some 40,000 non-skilled workers are engaged under government service contracts, we have thoroughly and carefully examined the impact of the minimum wage, particularly on the implementation on government service contracts. I will now announce the new wage arrangement for non-skilled workers engaged under government service contracts. In deciding on the new arrangement, let me stress that we have considered the elements of existing government service contracts, the expected outcome and impact of implementation of the statutory minimum wage, and have sought to strike a balance among various factors. The new arrangement is a lawful, reasonable and sensible measure.
For government service contracts engaging non-skilled workers to be tendered after May 1, the Government will require service contractors to undertake to set the monthly wages under the relevant government service contracts by making reference to the statutory minimum wage rate plus one paid rest day for every period of seven days. In other words, apart from complying with the legal requirement of paying wages at not lower than the minimum wage, government service contractors are required to offer their non-skilled workers one paid rest day for every period of seven days. On this basis, the workers concerned will receive wages amounting to 14.8% on top of the statutory minimum wage. Upon the implementation of minimum wage on May 1, it is no longer necessary, therefore, for us to continue with the mandatory wage requirement, which was introduced back in 2004 to offer wage protection for elementary workers.
In addition, we note that wages under the current Minimum Wage Requirement of some occupations of non-skilled workers are higher than the sum of minimum wage plus one paid rest day for every period of seven days. To ensure that wages of non-skilled workers will not be reduced upon implementation of statutory minimum wage, we will introduce a transitional arrangement whereby if the market average monthly wages for December 2010 of the relevant occupations are higher than the statutory minimum wage plus one paid rest day for every period of seven days, the market average monthly wages would continue to apply until the sum of minimum wage plus paid rest day catches up.
This new arrangement will apply to new government service contracts under which some 40,000 non-skilled workers are engaged. Under the new arrangement, the majority of the workers concerned would enjoy a pay rise. For example, a worker who works eight hours a day and six days a week would be entitled to monthly wages of not less than, I stress not less than, $6,944. Over half of the workers, and particularly cleaners would enjoy a pay rise of 20% or above. Indeed, for lavatory cleaners, it can be as high as 45%. No workers, I stress, would have their wages cut at all.
We understand that the new wage arrangement might have an impact on the private sector. However, as an enlightened employer, the Government always offers reasonable employment terms to staff as well as employees engaged under its service contracts.
Now let me turn to top-up arrangement for the service contractors. For existing government contracts engaging mainly non-skilled workers, if the wages of non-skilled workers are below the statutory minimum wage requirement, the service contractors will be obliged to pay their workers additional remuneration to meet the shortfall as from May 1. Whilst noting this is the contractors' liability basically, we appreciate that the implementation of the initial statutory minimum wage level is unique in that many service contractors were unable to capture the impact of minimum wage on their contract prices when offering bids at the tendering stage. Hence we have decided to make a special arrangement this time to authorise in principle bureaux and departments to provide top-up payments to service contractors to cover their wage cost increase arising solely and directly from the implementation of the statutory minimum wage, including the corresponding increase in Mandatory Provident Fund contributions, in order to protect the employment of existing employees as well as to ensure the continued provision of public services. We have to stress that the top-up arrangement is made out of our deep and genuine concerns over the employment, rights and benefits of non-skilled workers as well as to avoid any impact on public service delivery. We will proceed to discuss the details with the contractors concerned as soon as possible. The departments concerned will also, in accordance with their contract management system, spare no efforts to ensure that the top-up payments will go straight to the pocket of workers who are our target beneficiaries.
We need to reiterate that this arrangement is exceptional. As the level of the statutory minimum wage will be reviewed at least once in every two years, contractors have to take into account the possible impact of the reviews on the level of wage costs in future and reflect this suitably in the tender prices. The Government will not provide any more top-up payments upon subsequent reviews of the level of minimum wage.
We understand that the community holds different views and opinions on minimum wage implementation and on how the wage arrangement for non-skilled workers engaged in government service contracts should be handled. We firmly believe that the new wage arrangement and top-up payment will tide over government service contractors on the implementation of statutory minimum wage and ultimately benefit the workers concerned. Finally, I would like to take this opportunity to call on employers and employees to engage in candid, frank and sincere communication in a spirit of mutual understanding and to act lawfully, sensibly and reasonably to facilitate the smooth implementation of the statutory minimum wage, which seeks after all to offer wage protection to our grassroots workers. I am sure through working together, we can achieve a win-win situation for all employees, employers and the community at large.
I will elaborate on the details at the Manpower Panel of the Legislative Council at 2.40pm this afternoon. Thank you.
Reporter: Would the Government worry that this may set a bad example for private companies?
Secretary for Labour and Welfare: The other way round, I think we have really gone one very significant step forward. What I am saying is by actually mandating one paid rest day for every period of seven days, we are talking about providing extra 14.8% wage increase for all workers on top of minimum wage protection, in other words, $28 plus another 14.8% of their basic salary. This is a pretty decent increase. In fact, if you look at other grades, particularly lavatory cleaners for example, the increase could be as high as 45% including minimum wage, from $5,000 plus to $7,000 plus. It is a substantial jump in terms of the living standard and also in terms of take-home pay. So no matter how you look at it, our decision is a sensible, lawful and balanced measure.
(Please also refer to the Chinese portion of the transcript.)
Ends/Monday, April 11, 2011
Issued at HKT 15:36
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