Hong Kong debates minimum wages

Source :BusinessWorld Online

HONG KONG -- Yan starts work every afternoon cleaning clams and washing minced garlic before the hungry crowds descend on her employer’s popular Hong Kong seafood restaurant.

The waitress, who grew up in a town in nearby Guangdong province on China’s mainland, works into the early morning of the next day for little pay.

“Life is hard here,” said Yan, which is not her real name. “At home, things were slower and I could have run a little restaurant.”

Yan is among hundreds of thousands working for pay sometimes as low as $2.75 an hour, supplying the money-obsessed city known for its billionaire tycoons and glittering skyscrapers with a massive pool of cheap labor.

But concern about a growing income gap -- pegged as the world’s biggest among wealthy economies by the UN Development Program last year -- prompted the government to introduce the city’s first minimum wage, which is scheduled to come into effect in 2011. Now, business and union leaders are locked in a pitched battle over whether that wage should be as low as $3.10 or as high as $4.25, still far below other international cities in Europe and North America.

“The debate on minimum wage in other countries happened 50 or a 100 years ago, but the free marketers here have always argued against it,” said Lee Cheuk-yan, a legislator and head of the Confederation of Trade Unions, who organized a recent weekend wage protest that drew thousands of workers.

“Internationally, free marketers will feel they lost the last champion of the free economy, but so what? Even if we lost that image, if people can still make a profit they will come here.”

Mr. Lee said business is most concerned about whether a pay floor would open the door to maximum working hours and paid overtime, which don’t exist in a city regularly credited with having the world’s freest economy.
“It is quite absurd -- people can work 10, 12, 14 or even 16 hours a day without getting paid overtime,” he told AFP.

But life may not get much better for the city’s poorest citizens with job losses and rising food prices a likely consequence of the new pay law, said Terry Miller, director of the Center for International Trade and Economics at the Heritage Foundation, a conservative Washingon-based think tank.

The Foundation’s annual list of free economies put Hong Kong at the top in 2009, the 16th year in a row, edging out regional rival Singapore. “It is likely that the least skilled workers in the Hong Kong economy will be priced out of the labor market by the setting of a minimum wage,” Mr. Miller told AFP in an e-mail.

The proposed wage’s comparatively low level points to a decision that has little to do with economics, Mr. Miller added. “This is a clear indicator of a proposal that is essentially political rather than economic in nature,” he said.

The controversial issue has filled newspaper pages for months, with the Hong Kong General Chamber of Commerce warning that a high minimum wage could mean 150,000 lost jobs, although it has since backed off its opposition to the law.

The latest census found that about 16.9% of the city’s 2.78 million workers earned less than HK$33 ($4.25) an hour, with about 130,000 taking home less than HK$24 an hour. -- AFP

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