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SLW on adjustment of statutory minimum wage rate

     Following is the transcript of remarks by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, on the adjustment of statutory minimum wage rate today (December 12):

Secretary for Labour and Welfare: At its meeting yesterday, the Chief Executive in Council adopted the recommendation of the Minimum Wage Commission to adjust the statutory minimum wage rate from $28 per hour to $30 per hour, up by $2 or 7.1 per cent. Subsidiary legislation on the revised rate will be gazetted this Friday and tabled at the Legislative Council next Wednesday. Subject to the approval of the Legislative Council, the new rate will come into force on May 1 next year, that is, the next Labour Day.

     The Administration has carefully considered the Commission's report, and is of the view that the Commission has ably discharged its statutory function of reviewing the rate and that the basis of its deliberation is reasonable and balanced. I would like to take this opportunity to pay warm tribute to the Commission's chairperson, Mr Jat Sew-tong, and all members for their hard work and sterling contribution in fulfilling this important and arduous mission.

     The Commission adopted an evidence-based approach and reviewed the statutory minimum wage in an objective and balanced manner. Apart from making reference to the relevant data and a basket of indicators, it undertook detailed analysis and conducted an impact assessment based on wage distribution data and findings of other surveys. It also considered the views from various sectors of society before recommending the appropriate rate. In arriving at the recommended rate, the Commission has fully considered and carefully balanced all factors.

     According to the Commission's estimation, based on the data on the 2011 Annual Earnings and Hours Survey conducted by the Census and Statistics Department, some 327 200 employees will be covered by the recommended rate of $30 per hour, accounting for 11.7 per cent of all employees in Hong Kong. The actual number of employees involved and the coverage of the rate will be subject to the pay trend in the past year and the months ahead. On the basis of the pay trend up to mid-2012, the coverage will be about 223 100 employees or 7.9 per cent of all employees.

     The average wage increase of employees involved is estimated at 7.3 per cent. As for the cost impact on businesses, we reckoned that additional wage bill will be around $2 billion or up by 0.3 per cent. The impact on most sectors, including the low paying sectors, should be moderate.

     On the likely impact on unemployment, assuming a real year-on-year economic growth at 1.0 per cent for the first half of 2013, the Commission estimated that the overall unemployment rate would go up by about 0.3 percentage point. As Hong Kong's unemployment rate is still relatively low, this is unlikely to lead to a marked deterioration in the labour market.

     On the impact on inflation, the Commission reckoned that should there be a full pass-through of additional wage bills on prices of products and services, the Composite Consumer Price Index (CPI) is estimated to go up by about 0.3 to 0.4 percentage point. As a measure of inflation on the grassroots, the CPI (A) was estimated to rise by 0.5 to 0.6 percentage point. However, as a full pass-through to consumer prices would be unlikely, the actual impact should be lower than the estimate.

     The time of implementing statutory minimum wage rate in Hong Kong is still fairly short and this is also our first time to revise the wage rate. Various strata of society, in particular employers and employees, certainly need to take time to adjust to it. The Labour Department will step up its publicity and promotion efforts to facilitate employers and employees understand their obligations and entitlements.

     The implementation of statutory minimum wage since its introduction on May 1, 2011, has been generally smooth. The income of low-paid employees has improved noticeably in real terms. I appeal for the continued support of the community for the implementation of statutory minimum wage and maintenance of good labour-management relation in order to build a harmonious, fair and caring community.

Reporter: Is there any discussion on revising the minimum wage level more frequently?

Secretary of Labour and Welfare: Let's put it in context, the legislation itself provides flexibility for conducting more than one review within two years. The law requires that at least one review within two years, it is the minimum requirement. So if circumstances so warranted, the Commission can always conduct extra review to keep abreast of the latest development in the labour market and the economic situation. Depending on the economic situation and depending on the necessity for an additional review, the flexibility is here.

(Please also refer to the Chinese portion of the transcript.)

Ends/Wednesday, December 12, 2012
Issued at HKT 20:31


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