Hong Kong to introduce minimum wage. Singapore?

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Friday, 16 July 2010

Singapore Democrats

Hong Kong, one of the last few modern economies holding out on minimum wage, will likely pass a bill next week that will legislative minimum wage in the territory. According to legislators, the law is meant to protect workers from being exploited.

The Singapore Democrats have been calling for more than a decade for a similar law to be introduced in Singapore. We have said time and again that the most vulnerable workers are being taken advantage of by being paid wages that does not provide them a decent living.

For example, elderly workers are routinely paid a little more than $3 an hour for doing menial jobs. This works out to less than $600 a month for a full-time job. How does one survive on such an income in an expensive economy like Singapore?

Hitherto, Hong Kong has also resisted paying minimum wage and this has led to both economies having one of the biggest income disparities in the world.

If Hong Kong passes the legislation, Singapore will be one of the few countries left that does not have such a mandated provision. Over 90 percent of countries across the world have minimum wage in one form or another. The few countries that have no laws or regulations on minimum wage are Bahrain, Qatar, UAE, Tonga, Brunei, Somalia, and, of course, Singapore.

A Minimum Wage Commission will be established in Hong Kong comprising of trade unionists, employers and scholars to determine the level of minimu wage. Currently many Hong Kong employers pay their workers less than US$4 (S$6) an hour. This is already higher than what Singapore pays its low-wage workers.

The SDP has laid out a compelling case for minimum wage in Singapore in our Alternative Economic Programme (see here). We repeat our call for the Government to introduce a similar legislation to that in Hong Kong. This will ensure that our workers are not exploited and that prosperity and progress are enjoyed by all, not just the wealthy elite.

Hong Kong lawmakers debate minimum wage
CNN
14 Jul 10

Hong Kong lawmakers resumed debate Wednesday on a bill that may result in the region's first statutory minimum wage.

The Minimum Wage Bill is a controversial piece of legislation that lawmakers hope will protect the most vulnerable workers in Hong Kong, one of the few places in the world without any sort of minimum wage law.

The debate is set to take two to three days.

A recent government survey showed that around half a million workers in Hong Kong earn less than $4 an hour. These include low-skilled workers from the catering, retail, and cleaning industries.

According to Man Hon Poon, a policy researcher at the Hong Kong Confederation of Trade Union, the lack of legal protection for workers has led to serious exploitation.

"Workers in restaurants have to work for 12 hours or even 14 hours a day to earn a living," he said. "They cannot even go to the cinema."

Legislator Tommy Cheung, however, claims that the government should not interfere with the free market economy, which he says has served Hong Kong well in the past. A minimum wage could deter investors and lead to increased unemployment, said Cheung, who represents the catering industry.

"There is one fear within the industry, that they would have to close down," he said. "When you see a closure, everyone loses out."

The government first proposed the current bill in 2008 following a failed attempt at a voluntary minimum wage. Labor unions, however, have been lobbying for a minimum wage since 1998, following the Asian financial crisis.

The rate of the minimum wage has also been under great debate. Trade unions have been demanding a minimum wage of $4 while employer groups have been asking for $3 per hour.

If the bill passes this week, the rate of the minimum wage will be set by the Minimum Wage Commission, a consortium of trade union members, employers and scholars, in the coming months.

Once the chief executive approves the rate, employers will have six months to implement the law.

The Hong Kong government estimates that the earliest the minimum wage law may take effect is May 2011.

http://edition.cnn.com/2010/WORLD/asiapcf/07/14/china.hong.kong.minimum.wage/index.html?hpt=T2&fbid=cFYYtTV0ap3

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Comments (4)

Fri 16 Jul 2010 11:23 AM | BryanT - Raja and MinWage

Coincidentally, I came across this recently:

"A MINIMUM WAGE ... would at least provide the basis on which to build a fair and logical wage structure. If we are to raise the standards from sub-human levels, then we must know what the wage level should be for a man to live like a human." Rajaratnam, circa 1955.

David Marshall formed a committee to examine MinWages as probably the first and last serious attempt to do so. Raja was appointed as a member. This was in 1956.

In summary, the conclusion was that the average wage then was around $150, but the commonest wage was $100-120.

It was assessed that $120 a month would suffice to maintain a family of a man, wife, and two children at a minimum standard.

But the committee decided AGAINST fixing a MinWage. The reason : repercussions on Singapore's competitiveness, many jobs would be lost, and unemployment would rise.

Instead, it recommended improvement to the Wages Council Ordinance to regulate wages.

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For once, I provide a service to SDP, in offering a historical perspective. No thanks required :)

Fri 16 Jul 2010 11:49 AM | Tan Tai Wei

The late Goh Keng Swee, in the context of promoting moral education as education minister, said that it was to prevent social upheaval with the poor rebelling, as the income gap would inevitably continue to widen.

A safer bet would be to go along with SDP and Hongkong. However adversely "minimal wage" would affect the economy, it would still be a more concrete safeguard against the unrest Goh so feared.

Surely we should accept the risk of it to our economy in order to prevent the greater evil of rebellion and riots?

Fri 16 Jul 2010 12:46 PM | quantum - Singapore Kindness Movement

We are told by the government that we need to support the "Singapore Kindness Movement". So please implement a minimum wage to help the weak.

The PAP has betrayed its original founding values. It is now neither democratic nor socialistic.

Fri 16 Jul 2010 4:26 PM | Tan Tai Wei

BryanT,

Perhaps, Hongkong's proposed solution to the worry you dug out from history to state could be copied by us.

Set up a genuinely representational body, of both employers' and workers' interests, in order to regulate "minimal wages" that both prevent, say, employers' exploitation of oversupply of base workers to pay them unwarrantedly low wages, and also to cap minimal wages to prevent industries going bust and job loss.

Can't deny that in an economy where trade union activities are being restricted, the temptation is to pay as low as possible. "Minimal wage" could weed out such, and yet industries could be protected by the HK model?

Hongkong isn't too different from us, and yet they don't worry that mass unemployment would arise with "minimal wage"?