Minimum Wage

In the recent years, the inflation rate in Hong Kong is increasing continuously. Currency devaluation definitely comes as a result. This change makes some families which are living under poverty are more hardly to afford their daily need. In view of this, government has implemented the minimum wage to set a minimum wage of $28 per hour in May 2011 in order to narrow the wealth gap. Sad to say, this policy is not accepted by many parts of society. According to the result of a research conducted by China Realtime Report, 10% more interviewees think the policy cannot help the Hong Kong economy and narrowing the wealth gap but worsen the situation instead. They claim that the minimum wage has a counterproductive effect eventually. And there is a phenomenon that more people become unemployed and employers demand more from their employees.

In fact, the above research is valid. The sustained increase of inflation in Hong Kong is due to the nonstop depreciation of U.S. dollars. So even though the salary increased, the inflation rate is still rising rapidly. It can only release the pressure of inflation in a short term. Therefore the minimum wage cannot catch up the change actually. Consumer price is still far higher than unprivileged group’s income. So their difficult living condition is not improved but even worsened. The effect of minimum wage is highly dubious.

Moreover, the minimum wage of $28 per hour increases the burden of employers. Their operating expenses of business rose directly. So they try hard to broaden sources of income and reduce expenses. The report of the provisional minimum wage commission released by labour department of government in 2010 (P.87 Figure 5.5: Estimated reduction in working hours under different SMW scenarios) shows if the wage per hour increases, the reduction of employees and their total working hours will definitely follow. The total annual working hours fall after the minimum wage implement because employers cut the number and...