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The following is issued on behalf of the Minimum Wage Commission:
The Chairperson of the Minimum Wage Commission (MWC), Mr Jat Sew-tong, SC, met the media today (January 15) and said he earnestly hoped that the Statutory Minimum Wage (SMW) rate of $32.50 per hour recommended with the unanimous consensus of all MWC members could be accepted by the Legislative Council.
Adopting an evidence-based approach, the MWC reviewed the SMW rate in a comprehensive, objective and balanced manner. Apart from making reference to the statistics in an Array of Indicators (including a large number of indicators which were released and updated more frequently), the MWC also studied in detail the findings of other surveys and fully considered the views from various sectors of the community. The MWC also took into account other relevant considerations that could not be fully quantified and conducted impact assessment under different SMW test levels.
Based on the data from the Annual Earnings and Hours Survey conducted by the Census and Statistics Department (C&SD), the number of employees earning an hourly wage less than $32.50 in May to June 2013 was 255 200, with a coverage of 8.7 per cent of all employees in Hong Kong. Taking into account the latest data from the General Household Survey and the Labour Earnings Survey conducted by the C&SD, the MWC roughly estimated that in the first half of 2015 and at the time just before the SMW rate is raised to the recommended level, there would be approximately 150 000 employees (accounting for about 5 per cent of all employees) earning an hourly wage less than $32.50.
For the impact on businesses, taking into account rest day and meal break pay (for employees who are granted these payments according to their employment contract or agreement) that are beyond the statutory requirements, together with the impact of knock-on effects, the MWC estimated that the total additional wage bill arising from the recommended SMW rate would be around $1.36 billion, representing an increase of about 0.2 per cent. The MWC envisaged that the additional wage bill entailed by the recommended SMW rate should be manageable for most enterprises (including low-paying sectors and small and medium enterprises).
As regards the impact on the unemployment rate, should the Hong Kong economy grow by 2.5 per cent in the first half of 2015, the MWC estimated that the recommended SMW rate would lead to an increase of about 0.1 percentage points to 0.2 percentage points in the overall unemployment rate. With slower economic growth at 1.5 per cent, the increase in the overall unemployment rate was estimated to be about 0.4 percentage points. According to the MWC, with the prevailing unemployment rate in Hong Kong still relatively low, the recommended rate is unlikely to trigger a marked deterioration in the labour market. As for the impact on inflation, assuming a full pass-on of the additional wage bill to prices of products and services and taking into account the first round of a wage-price spiral effect, it was estimated that the Composite Consumer Price Index would go up by about 0.3 percentage points. However, as it is unlikely for all enterprises to fully pass on the additional wage bill to consumers, the actual impact of the recommended SMW rate on inflation should be smaller than the above estimate.
"The MWC considers that the recommended SMW rate maintains an appropriate balance between the objectives of forestalling excessively low wages and minimising the loss of low-paid jobs, whilst giving due regard to the need to sustain Hong Kong's economic growth and competitiveness," Mr Jat said.
The full text of the "2014 Report of the Minimum Wage Commission" has been uploaded to the MWC's website (www.mwc.org.hk).
Ends/Thursday, January 15, 2015
Issued at HKT 18:50
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