Minimum wage could cost 'up to 152,000 jobs' Minimum wage could cost up to 152,000 jobs, chamber warns
Daniel Sin
23 December 2009
South China Morning Post
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Setting a statutory minimum wage at HK$5,000 a month could drive about 100,000 people out of work and push unemployment to 8 per cent.
At a rate of HK$6,000 a month, about 152,000 jobs could be lost and 9.5 per cent of the workforce left unemployed.
Even a lower monthly minimum wage of HK$4,000 might put 33,650 people out of work and raise the unemployment rate to 6.3 per cent.
These figures - the first time such calculations on the possible impact of a minimum wage have been done in Hong Kong - were presented by the Hong Kong General Chamber of Commerce in its submission to the Provisional Minimum Wage Commission last Friday, to illustrate how a minimum wage might affect employment, and highlight other issues that could emerge.
The chamber sought feedback from about 15 of its smaller member companies, from the restaurant, fast-food and flower-shop sectors, from which it was suggested that between a quarter and a half of low-paid employees would be laid off if the minimum wage was set at between HK$4,000 and HK$6,000 a month.
There are 197,200 people earning less than HK$4,000 per month, according to the government, although it has not said how many of those are working part time.
A senior member of the chamber, who preferred not to be named, said implementing a minimum wage might even trigger a "cascading effect", pushing up the salaries of higher paid staff. Human resources departments in some of the chamber's member companies were already examining the implications, he said.
The member emphasised that the calculations were not meant to be a prediction, but to demonstrate a reasonable framework and
methodology for the government to assess, in a quantitative way, the precise impacts of the policy, and to prescribe
measures to deal with them. The chamber was not advocating a specific minimum wage, he added.
"There is a gap between the minimum wage and the market rate of salaries," he said. "The issue is that the government, employers and the community as a whole all have to be responsible for bridging the gap when a minimum wage policy is effective."
Confederation of Trade Unions general secretary and lawmaker Lee Cheuk-yan said the calculations were "a bluff".
Lee said there were many ways a company could absorb the additional cost caused by a minimum wage, and it did not necessarily have to resort to laying off employees.
He said low-paid older workers were not just an "extra pair of hands".
"Employers are not philanthropists," he said. "If they retain a worker, there must be some use for him."
Ng Wai-yee, of the Federation of Hong Kong and Kowloon Labour Unions, said that if the minimum wage was too low, employees might seek social security rather than work, which would increase the burden on society.
But the president of the Hong Kong Chamber of Small and Medium Business, Lau Wah-kin, found the chamber's calculations plausible.
He said that in many small and medium-sized enterprises, older but "less productive" workers were retained largely because of employers' "personal attachment" towards them for their long
history of service. But when business was bad, the company's survival would come first.
Lau said a minimum wage of HK$30
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