LCQ4: Non-skilled workers employed under government service contracts
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Question:
Some members of the property management sector have relayed that quite a number of non-skilled workers employed under government service contracts, particularly those at junior levels such as cleaners and security guards, are paid the statutory minimum wage (SMW) or slightly more than that level. As government service contracts usually last for three years and are on an all-inclusive basis, the change in the SMW rate arrangement to annual reviews may result in government service contractors incurring losses due to repeated upward adjustments to the SMW rate during the contract period. Furthermore, while the Enhanced Supplementary Labour Scheme now allows the importation of labour for the property management sector, it is learnt that the relevant government service contracts do not allow contractors to employ imported labour. In this connection, will the Government inform this Council:
(1) of the number of non-skilled workers employed under government service contracts who are currently paid SMW or at a rate that is less than 10 per cent above SMW;
(2) whether it will consider enhancing the pay arrangements for non-skilled workers employed under government service contracts, so that the Government will bear the additional pay costs arising from the upward adjustments to SMW, instead of requiring contractors to "underwrite" relevant policy risks; and
(3) whether it will consider relaxing the restriction that prohibits the employment of labour under government service contracts?
Reply:
President,
Having consulted the Labour and Welfare Bureau and the four major government departments which employ non-skilled workers under service contracts (i.e. the Food and Environmental Hygiene Department, the Leisure and Cultural Services Department, the Government Property Agency and the Housing Department), our reply to the question raised by the Hon Tony Tse is as follows:
(1) The Government has implemented a series of enhancement measures in recent years to protect the remuneration of outsourced non-skilled workers. The service contracts awarded by the four major departments through tendering involve more than 43 000 outsourced non-skilled workers. The median "committed hourly wage" offered by the service contractors to the relevant workers is about $55, which is about 30 per cent higher than the prevailing Statutory Minimum Wage (SMW) rate (i.e. $42.1) and about 8 per cent higher than the median market rate (i.e. $51) of the "Estate management, security and cleaning services" industry covering the group of elementary occupations and service workers in 2024 published by the Census and Statistics Department (C&SD).
Among the some 43 000 workers, about 99 per cent are entitled to a "committed hourly wage" that is at least 10 per cent higher than the SMW rate (i.e. at least $46.3), and the remaining 1 per cent (about 400 workers) are entitled to a "committed hourly wage" that is about 7 per cent higher than the SMW rate on average. As the "committed hourly wage" is the minimum hourly wage that the contractors commit to pay to their non-skilled workers during the tendering process, the actual hourly wage of the workers may be higher than this rate, and the service contractors may increase their wage level during the contract period in light of market conditions.
(2) As mentioned just now, the hourly wage of about 99 per cent of outsourced non-skilled workers under the four major departments is at least 10 per cent higher than the SMW rate. Hence, unless there is a very significant increase in the SMW rate within a short period of time, it is unlikely that government service contractors would have to pay more to their workers solely because of an increase in the SMW. For example, the SMW increased by about 5 per cent from $40 per hour (which took effect two years ago) to $42.1 per hour (effective from May this year).
Under the new "annual review" mechanism, the SMW will be subject to more frequent adjustments than before. However, as the new mechanism adopts a "formula" for adjustment under an open and objective basis, enterprises can make early planning. Therefore, service contractors should be able to make more informed estimates when proposing the "committed hourly wage" in their tender submissions.
The Government has all along required service contractors to provide their employees with remuneration in compliance with the legislation in Hong Kong and employment contracts (including the provision of hourly wage not lower than the SMW rate), which is no different from other employers in Hong Kong. When submitting tenders, service contractors would take into account cost-related factors including material costs, rent, wages, etc., and reflect them in the tender prices as appropriate. As these bidding strategies are commercial decisions, the Government does not plan to subsidise the increased operating costs incurred by the service contractors due to adjustment of SMW rate.
(3) On the premise of ensuring employment priority for local workers, the Government suitably allows employers to apply for importation of workers to replenish the labour force of Hong Kong. The Labour Department (LD) has implemented the Enhanced Supplementary Labour Scheme (ESLS) since September 2023, which allows labour importation for 26 job categories as well as unskilled or low-skilled posts under the Supplementary Labour Scheme for two years. As at end of June this year, the number of cleaners and security guards applied for importation under the ESLS was about 23 000, and about 7 000 workers were approved for importation in total. According to C&SD's 2024 Annual Earnings and Hours Survey, there were about 190 000 workers in the "Estate management, security and cleaning services" industry covering the group of elementary occupations and service workers. The number of cleaners and security guards approved for importation under the ESLS accounted for less than 4 per cent of the above number.
The remuneration for non-skilled workers under government outsourced service contracts is different from that under the ESLS on various fronts. Specifically, government service contractors must pay non-skilled workers at a rate not lower than the "committed wage" as stipulated in the contracts, while the ESLS requires that imported workers be paid no less than the median monthly wages of local workers in comparable positions. Moreover, requirements on other employment terms are in place under government outsourced service contracts (such as the provision of gratuity and wage arrangement for working when the typhoon signal no. 8 or above is hoisted).
We will maintain communication with LD to keep abreast of the demand and supply of the relevant non-skilled workers in the local labour market (including the situation on labour importation), and explore implementation arrangements to allow importation of labour in government outsourced service contracts upon ascertaining the occurrence of labour shortages under the principle of ensuring employment priority for local workers. The arrangements include addressing the discrepancy between the "committed wage" to be provided by contractors under contract requirements and the wages for imported workers, as well as co-ordinating the monitoring mechanisms across different systems, so as to ensure effective use of public money and proper monitoring of service contractors. We have to reiterate that any arrangement by the Government on importation of labour must be implemented on the premise of ensuring employment priority for local workers. LD will also play a robust gate-keeping role and stringently process each application.
Thank you, President.
Ends/Wednesday, July 23, 2025
Issued at HKT 13:00
Issued at HKT 13:00
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