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LCQ5: Sharing of fruits of economic prosperity
     Following is a question by the Hon Chan Yuen-han and a reply by the Acting Secretary for Commerce and Economic Development, Mr Godfrey Leung, in the Legislative Council today (July 13):

     The gross domestic product per capita of Hong Kong rose by 60 per cent from about $190,000 in 2004 to $310,000 in 2015. However, the real wage index in the same period showed a meagre increase of 0.5 per cent in 11 years after hitting its bottom point in March 2004. This reflects that wage earners have not been able to share the fruits of economic prosperity. Moreover, there are comments that as the cumulative inflation rate between 2009 and 2015 was about 23 per cent, wage earners, in a situation of stagnant income, need to face the predicament of ever increasing living expenses, which results in their quality of life deteriorating. In addition, there are comments that the Government favours the interests of the business sector without regard to labour rights and interests when formulating policies. Also, the high land premium policy has resulted in high levels of shop and office rentals, which is not conducive to the development of various trades and industries, and throttled the room for survival of small enterprises. In this connection, will the Government inform this Council:
(1) whether it has studied if the comments that the Government favours the business sector but not wage earners are justified; if it has studied and the outcome is in the affirmative, how the Government will reverse such a situation, such as whether it will introduce progressive profits tax, capital gains tax, etc., so as to achieve wealth re-distribution and enable wage earners and grassroots families to have a share of the fruits of economic prosperity;

(2) whether it will comprehensively review the legislation related to labour rights and interests and enact labour laws such as legislation on standard working hours, so as to enable wage earners to enjoy the labour rights, interests and protection that they deserve; and

(3) whether it has explored ways to create more job opportunities and expand the room for survival of small enterprises, with a view to creating opportunities for wage earners and small enterprise owners to move upward?


Acting President,

     In regard to the Hon Chan Yuen-han's question, a reply consolidated in consultation with the Labour and Welfare Bureau, the Financial Services and the Treasury Bureau and the Economic Analysis and Business Facilitation Unit is as follows:

(1) The Government has been implementing policies and measures to support the development of various trades and industries and encourage business start-ups.  By offering appropriate support to the relevant trades and industries, the Government strives to diversify and broaden the economic base of Hong Kong, with a view to achieving long-term sustainable development. With the diversified and vibrant development of enterprises in our economy, employment opportunities will be created, thus benefiting the working class at large.

     Moreover, the Government is committed to safeguarding labour interests. There is no such case where the Government favours the business sector but not wage earners. According to some relevant figures, the nominal wage index increased by around 44 per cent in cumulative terms from 2004 to 2015. After discounting the effect of inflation, the real wage index increased by around 2 per cent in cumulative terms over the same period.

     Since the implementation of the Statutory Minimum Wage (SMW) in May 2011, the employment earnings of grassroots workers saw more notable improvement. The average monthly employment earnings of full-time grassroots employees, i.e. those with earnings in the lowest decile, excluding foreign domestic workers, increased by around 7 per cent annually from 2010, i.e. prior to the implementation of SMW, to 2015. In cumulative terms, the increases were around 42 per cent in nominal terms and 12 per cent in real terms after discounting inflation, which were higher than the cumulative growth for the overall full-time employees at around 29 per cent in nominal terms and 5 per cent in real terms over the same period.

     As regards tax collection, in Year of Assessment 2014-15, of the 3.77 million working population in Hong Kong, about 1.98 million or 52 per cent of the working population need not pay any salaries tax. Moreover, the 2016-17 Budget has put forward a set of tax and short-term relief measures, which cost $38.8 billion in total. These measures can help ease the burden of citizens.

(2) The Government has been reviewing labour legislation from time to time so as to improve employees' rights and benefits progressively, having regard to Hong Kong's social changes and pace of economic development, and taking into account the need to strike a reasonable balance between the interests of employers and employees. Over the past few years, the Government has implemented the Statutory Minimum Wage, criminalised defaults on payment of awards of the Labour Tribunal or Minor Employment Claims Adjudication Board, implemented statutory paternity leave, and increased the levels of compensation relating to injury at work or prescribed occupational diseases. The Government will continue to conduct timely reviews of labour legislation to improve employees' rights and benefits.

     On standard working hours, the Standard Working Hours Committee (SWHC) is conducting a three-month second-stage consultation on the working hours policy directions under exploration to collect public views to facilitate its preparation of the report to the Government. The Government will, upon receipt of the report, holistically consider the views of the SWHC as well as those of other stakeholders in formulating the working hours policy that suits Hong Kong.

(3) The Government attaches great importance to economic development, with a view to increasing the employment and business start-up opportunities and choices for Hong Kong people so that they can join different industries according to their interests and abilities. The Economic Development Commission (EDC), led personally by the Chief Executive, has been providing visionary direction and advice to the government on the overall strategy and policy to broaden the economic base and enhance long-term economic development. The EDC has submitted specific recommendations on measures for supporting the development of various industries to the Government, and these measures are being progressively implemented. The EDC will continue to explore and identify sectors which present opportunities for Hong Kong's further economic growth, and recommend possible support policies and measures as appropriate.

     Small and medium enterprises (SMEs) are the mainstay of the economy of Hong Kong. The Government attaches much importance to the development of SMEs and provides them with appropriate support through its departments and public organisations. For instance, the Financial Secretary announced in the 2016-17 Budget that the Government would extend the application period of the special concessionary measures under the SME Financing Guarantee Scheme to February 28, 2017, reduce the annual guarantee fee rate for loan guarantee applications approved under the measures by 10 per cent, and remove the requirement of a minimum guarantee fee rate of 0.5 per cent for loan guarantee applications.

     To demonstrate its support to SMEs, the Hong Kong Export Credit Insurance Corporation (ECIC) introduced, on March 1, 2013, the "Small Business Policy" (SBP) which caters for exporting companies with an annual turnover of less than $50 million. With effect from March 1, 2016, the ECIC has permanently waived the full annual policy fee and offered 20 per cent premium discount for all SBPs.

     The Government will also continue to implement various SME Funding Schemes. Of these, the SME Export Marketing Fund provides financial assistance to SMEs for participation in export promotion activities, while the SME Development Fund provides financial support to non-profit-distributing organisations to implement projects which may enhance the competitiveness of Hong Kong's SMEs in general or in specific sectors. In the 2015-16 financial year, the Government injected $1.5 billion into the above-mentioned Funds and implemented enhancement measures to strengthen the support provided for SMEs under the two Funds.

     Besides, through the $1 billion Dedicated Fund on Branding, Upgrading and Domestic Sales, the Government provides support for enterprises in branding, upgrading and domestic sales to facilitate their business development in the Mainland.

     The Government will continue to expand the scope of development for SMEs by providing them with support through various schemes. We will also review our measures in the light of economic changes to provide enterprises with appropriate support.
Ends/Wednesday, July 13, 2016
Issued at HKT 16:51
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