Motion Debate on Minimum wage, standard working hours (1 November 2006)

MR JAMES TIEN (in Cantonese): Madam President, the debates conducted in the community on whether a minimum wage should be prescribed in Hong Kong have often given people an impression that those in support of the idea must be doing good to wage earners, while those holding views to the contrary must be doing harm to wage earners; and those opposing the prescription of a minimum wage must be consortia, while those rendering support might probably be small industries.

Madam President, according to a development report published by the World Bank in 2004-2005, minimum wages have been implemented in more than 130 countries worldwide, including such Asian regions as China, Taiwan, Japan, Korea and Thailand; and such developed nations as the United States, Britain, France, and so on. While there are definitely some successful cases of implementing a minimum wage in these places, many places have proved to be a failure. According to its experience, the World Bank pointed out that the best method to help people rid themselves of poverty is to create good job opportunities. Although a number of countries or regions around the world have already imposed a minimum wage, the problem of working poverty can still be found in these places, with the unemployment rates varying from place to place.

Setting a minimum wage is not the best way to reduce working poverty. Other policies must be implemented to complement it in order to truly help people with low educational attainments who cannot keep pace with the economic transformation and find a better-paid job. Madam President, Nobel Laureate in Economics Edmund PHELPS has recently indicated that, should a minimum wage system be implemented, low-skilled workers will receive even worse treatment as employers will definitely prefer higher-skilled workers because they have to pay more for their employees. As a result, unskilled or low-skilled workers will definitely be forced out of work.

Madam President, according to some academics in Hong Kong, such as Prof Francis LUI, should a minimum wage be set, the employment opportunities of young people and disabled people with no working experience will be the hardest hit. Prof LUI has also added that the northward shift of local companies might be speeded up as a result of implementation of a minimum wage. Furthermore, employers will employ mainland workers for the purpose of reducing costs. While this applied merely to industries in the past, we can now see that the services sectors, such as the banking sector, have moved much of their back office work, such as clerical work, northward. The same applies to the accountancy profession and many design companies. The impact is thus evident. Dr LUI Hon-kwong has also pointed out that job openings will disappear altogether as employers might wind up their business because they cannot obtain reasonable returns. Such a possibility does exist. Prof Stephen CHEUNG has also pointed out that this might give rise to black market labour. As employers tend to employ experienced employees, inexperienced job seekers are thus put in a disadvantaged position. In the long term, this may cause the unemployment rate to rise.

Madam President, we may also take a look at France, which was hit by employment problems months ago. At present, the average unemployment rate in France stands at 10%. Their figures have also revealed that the average unemployment rates of people aged below 25 and young people of ethnic minority groups stand at as high as 25% and 50% respectively. These people were actually the hard core of the riots taken place in France more than half a year ago.

To sum up, should a minimum wage be prescribed in Hong Kong? Can all the problems be definitely resolved after a minimum wage is set? In the United States, for instance, the hourly minimum wage is US$5.15. It is nonetheless amazing that the hourly minimum wage can reach US$9.14 in San Francisco. Why should a minimum wage be set in such countries like the United States? It is probably because the country is so big that a mechanism must be established to avoid an exceedingly wide gap in wages across the country. Hong Kong is just a city, though wages certainly vary from district to district, such as North District, Tin Shui Wai and Central. However, the gap will not be as wide as those in overseas countries. Furthermore, our work processes can be moved northward.

In my opinion, provided that the unemployment rate continues to fall such that employers find it difficult in recruiting employees, workers will naturally be given better job opportunities or higher wages. A minor problem with supply and demand still exists though, as 150 One-way Exit Permit holders are being admitted to Hong Kong on a daily basis. Three years ago, two thirds of these people were below the age of 15. At present, two thirds of these people are between the age of 25 and 44. As all of them have relatively low educational attainments, they may have to work in the cleansing or guarding services sectors.

Generally speaking, as long as the economy continues to prosper, the 4.7% unemployment rate continues to fall, thus making recruitment difficult, more job opportunities will be created in Hong Kong. By then, employees will naturally have a stronger bargaining power. Employers might even offer a pay rise to employees wishing to switch jobs without their saying anything. On the contrary, many people in the business sector will be worried if an average wage is set because it is calculated by dividing the sum of the maximum wage and minimum wage. Can they afford it? Therefore, I think that employers and employees should work with the Government to create more job opportunities. Thank you, Madam President.