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The Government announced today (April 11) that in view of the implementation of the statutory minimum wage (SMW), service contractors tendering for government service contacts engaging mainly non-skilled workers after May 1 must undertake to set the monthly wages under the relevant government service contracts by making reference to the SMW rate plus one paid rest day for every period of seven days.
With the implementation of the new arrangement, it is no longer necessary to continue with the mandatory wage requirement (MWR) which was introduced in 2004 to offer wage protection.
Regarding the fact that wages under the current MWR of some occupations of non-skilled workers are higher than the sum of SMW plus one paid rest day for every period of seven days, the Government will introduce a transitional arrangement to ensure that wages of non-skilled workers will not be reduced upon SMW implementation.
If the market average monthly wages for December 2010 of the relevant occupations are higher than the SMW plus one paid rest day for every period of seven days, the market average monthly wages would continue to apply until the sum of SMW plus paid rest day catches up.
The above new arrangement will apply to new government service contracts under which some 40 000 non-skilled workers are engaged. A worker who works eight hours a day and six days a week would be entitled to monthly wages of not less than $6,944.
For existing government contracts, if the wages of non-skilled workers are below the SMW requirement, the service contractors will be obliged to pay their non-skilled workers additional remuneration to meet the shortfall with effect from May 1.
As many service contractors were unable to capture the impact of the SMW on their contract prices when offering bids at the tendering stage, the Government has decided to make an exceptional arrangement to authorise in principle departments to provide top-up payments to service contractors to cover their wage cost increase arising solely and directly from SMW implementation in order to protect the employment of existing employees as well as to ensure the continued provision of public services.
Relevant departments will proceed to discuss the details with the contractors concerned as soon as possible. They will also, in accordance with their contract management system, ensure that the top-up payments will go to the workers who are our target beneficiaries.
As the SMW level will be reviewed at least once every two years, contractors must take into account the possible impact of these SMW reviews on wage costs in future. The Government will not provide top-up payments for subsequent reviews of the SMW level.
Ends/Monday, April 11, 2011
Issued at HKT 13:13
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