LCQ4: Supporting sustained development of local enterprises
***********************************************************
Question:
There are views that over the years, the level of the Statutory Minimum Wage (SMW) has been progressively raised from the initial $28 per hour to the current $42.1 per hour. The ripple effect has continuously driven up the manpower costs of local enterprises and led to price increases. It has also prompted more members of the public to opt for going north for spending, thus rendering the operation of many enterprises (particularly the catering industry) increasingly difficult. In this connection, will the Government inform this Council:
(1) whether it has compiled statistics on the cumulative increases in the average remuneration levels and the overall operating costs of major industries (including the catering industry) since the implementation of the SMW in 2011, together with a breakdown by industry;
(2) as there are views that following the change to an "annual review" of SMW, remuneration levels will rise at a faster pace and further affect the overall competitiveness of local enterprises, of the specific measures put in place by the Government to assist enterprises (particularly the catering industry) in reducing their manpower and overall costs; and
(3) given that the Government has set up dedicated development funds to promote the sustained development of various industries, whether the authorities will consider setting up a "Catering Industry Development Fund" to specifically support the sustained development of the catering industry; if so, of the details; if not, the reasons for that?
Reply:
President,
The Statutory Minimum Wage (SMW) regime has been implemented since May 2011 which was a consensus reached between employers and employees after years of extensive discussions. The SMW provides a wage floor to forestall excessively low wages and safeguard the employment earnings of grassroots employees, while sustaining Hong Kong's economic growth and competitiveness, and minimising the loss of low-paid jobs.
Established under the Minimum Wage Ordinance, the main function of the Minimum Wage Commission (MWC) is to report to the Chief Executive in Council (ExCo) its recommendation about the SMW rate. During 2011 to 2025, the MWC reviewed the SMW rate once in every two years. The MWC conducted the reviews by an evidence-based approach, taking into account a host of factors including (i) an array of indicators on general economic conditions, labour market conditions, competitiveness and social inclusion; (ii) the views from members of the public and stakeholders; (iii) other relevant considerations; and (iv) impact assessment to ensure its recommendations were in line with the policy objectives of the SMW. In 2023, the MWC completed the study on enhancing the review mechanism of SMW and recommended adopting a formula for implementing the new annual review mechanism of the SMW. The recommendation was accepted by ExCo in April 2024.
Since the implementation of the SMW, the employment earnings of grassroots employees have improved. On the whole, the objectives of the SMW regime have been met. In consultation with relevant bureaux, the reply to the question raised by Member is as follows:
(1) According to the Annual Earnings and Hours Survey conducted by the Census and Statistics Department (C&SD), the overall median monthly wage for employees in 2025 increased by approximately 65.5 per cent as compared to 2011. Statistics on median monthly wage of employees by industry are set out in Annex 1. According to the Annual Survey of Economic Activities conducted by C&SD, the comparison between the total expenses of enterprises in 2011 and 2024 is set out in Annex 2.
(2) The MWC has completed the review on the SMW rate by adopting the formula under the annual review mechanism. The formula, comprising the two indicators of inflation and the economic growth factor, ensures the rate of the SMW adjustment is not lower than inflation and enables grassroots employees and employers to jointly benefit from economic growth when the Hong Kong economy performs well. The formula is in line with the policy objectives of the SMW. Besides, it enhances the transparency and predictability of the SMW reviews, minimises controversy and is conducive to fostering harmonious labour relations. ExCo accepted the recommendation of the MWC on February 10 this year. Subject to the approval of the Legislative Council, the SMW rate will be raised from its prevailing level of $42.1 per hour to $43.1 on May 1, representing an increase of 2.4 per cent.
In fact, manpower only constitutes a component of business operations, and manpower costs are affected by various factors such as market supply and demand, as well as technology application. The MWC assessed that the overall impacts of the new SMW rate on costs of enterprises, unemployment rate and inflation are relatively modest. The MWC estimated that for all sectors combined, the additional wage bills due to the SMW uprating (including the knock-on effect on pay hierarchies) would be about 0.01 per cent to 0.03 per cent of the total wage bills (about $110 million to $260 million). As regards the number of employees, the MWC estimated that the number of employees earning hourly wages lower than the new SMW rate would be around 19 000 to 39 000, representing about 1 per cent of all employees in Hong Kong.
The Government has been committed to supporting local enterprises. The Chief Executive's Policy Address last year introduced different support measures to alleviate pressure on business operations, including various concessions of fees and charges such as water and sewage charges for non-domestic accounts, trade effluent surcharge and other licence fees. In respect of the catering industry, the Government has been striving to streamline the food business licensing regime by removing barriers and lowering compliance costs for the trade, without compromising hygiene and food safety. For example, we have introduced a Composite Permit that covers multiple restricted food items to obviate the need for separate applications and fees for each item. Besides, the Government has tabled legislative amendment proposals into the Legislative Council for relaxing the restriction and allowing restaurant operators to apply for permission for dogs entry of food premises, thereby facilitating dog owners to dine out and creating new business opportunities for the catering industry. Furthermore, the Business Facilitation Advisory Committee, and its food business-related Task Force and Business Liaison Groups will continue to provide platforms for the Government and the business sector (including catering industry) to offer advice on possible measures to enhance regulatory efficiency and business-friendliness.
(3) The sustainable development of the catering industry involves various factors, such as operation model and financing, application of technology, talent training, and market development. The Government has rolled out various programmes and funds for small and medium enterprises (SMEs) for which food business operators may apply to meet their development needs, such as the Digital Transformation Support Pilot Programme may provide subsidies for applying digital solutions to enhance operational efficiency; and the SME Financing Guarantee Scheme may provide loan guarantee. The Employees Retraining Board and the Continuing Education Fund also provide or subsidise relevant training to support the sustainable development of the catering industry.
The Government will closely monitor the implementation of the new annual review mechanism of SMW and conduct a review five to 10 years after its implementation to ensure that the SMW regime meets the policy objectives, and supports Hong Kong's social harmony and economic development needs.
Ends/Wednesday, March 25, 2026
Issued at HKT 14:45
Issued at HKT 14:45
NNNN