On 2 February 2021, the Hong Kong Government announced that Hong Kong’s statutory minimum wage would remain at HK$37.5 per hour until at least 2023. This marks the first time the SAR has seen such a freeze since the minimum wage was introduced on 1 May 2011 and is in stark contrast to 2017 – 2019, where it saw an 8.7% increase.
Portia Tang, Director, Head of Professional Resources Solutions & Client Services, BDO Financial Services Limited, said, “It is a surprising and impactful announcement, but we all knew the Government had to act decisively to help combat the COVID-led global recession that we are facing.”
Joseph Hong, Director and Head of Payroll & HR Outsourcing Services, BDO Financial Services Limited, highlighted that the Secretary for Labour and Welfare, Law Chi Kong, had said the decision was based on the fact that most of the labour and employer representatives on the Minimum Wage Commission (MWC) have already agreed to maintain the current minimum wage, given the deep economic recession brought on by the COVID-19 pandemic and the high unemployment rate (as of February 2021, Hong Kong’s unemployment rate had soared to a 17-year high of 7.2% or 261,600 people).
The Government was also aiming to avoid cuts in low-paid jobs, increasing the unemployment rate further (according to data from the MWC, around 22,000 employees were paid the hourly minimum wage as of June 2019, and more than half were security guards and cleaners). Law stressed that the minimum wage should not be the only solution for low-income families and to reduce poverty, as the Government is looking at other measures to help the underprivileged.
However, the Government’s decision to freeze the statutory minimum wage at the 2019 level is a double-edged sword. It may still hurt low-income families and poverty, as the purchasing power of the current minimum wage will be reduced due to the inflation factor. Low-income workers have voiced concerns that their standard of living will fall as the prices of consumer products continue to rise in response to the incremental costs created by the COVID-19 pandemic. The pandemic has resulted in costly disruptions in the supply chain and flights and voyages being cancelled or delayed due to government interventions such as quarantine, stricter customs checks and entry restrictions.
According to the Census and Statistics Department’s latest Consumer Price Index (CPI) figures for January 2021, consumer prices rose by 1.9% overall in January 2021 compared with the same month a year earlier. The rate of inflation is likely to rise in the near future due to the persistent, incremental rises in the prices of various types of consumer products.
The local and global economic situation look set to continue to be challenging amid the ongoing threat of COVID-19. The Government will continue to monitor the situation closely and may need to adjust the statutory minimum wage as appropriate before 2023.
Paul Arkwright
Publisher
