Hong Kong Aff

The plan solves and avoids disads

The subsistence needs of low-wage earners provide further insight into this issue. According to local research studies, to make ends meet, an average worker needs a wage level of at least HK$36 per hour at current prices. Adjusting for inflation in 2014 and 2015, the subsistence wage level will be about HK$39 per hour in 2015. In other words, from the angle of meeting workers' subsistence needs, the current minimum wage is seriously insufficient and companies employing such workers are being subsidised by those who can least afford it, the underpaid workers themselves. One common reason cited for suggesting a minimum wage freeze is that any rise would cause inflation. We believe this is an excuse to obstruct a wage review. In Hong Kong, food and housing rent have been the major drivers of inflation over the years, not labour costs. Another oft-cited argument for favouring a freeze is that a rise will cause difficulties in low-paying business sectors. Evidence, however, actually provides a case for a rise to HK$36 per hour in 2015. According to Minimum Wage Commission statistics, increasing it to HK$36 per hour will raise the overall wage bills of small and medium-sized enterprises in low-paying sectors by 2.6 per cent. Given the government's projection of a gross domestic product increase in nominal terms of 4-5 per cent in 2014 and 5.5 per cent in 2015 - or a cumulative increase of at least 9.7 per cent - we expect SMEs as a whole to be able to absorb the additional wage bills by increasing their business receipts through sales or price hikes. Therefore, reason dictates that the minimum wage should be and can be raised to HK$36 per hour in 2015. The current level is too low to meet the subsistence needs of low-wage-earners.

Spillover effect – everyone benefits from a minimum wage raise because companies maintain wage differentials

MWC 14 [JAT Sew Tong et al (Chairperson of the Minimum Wage Commission of Hong Kong), “2014 Report of the Minimum Wage Commission,” Minimum Wage Commission] AZ

SMW brought about visible positive effect on the income of lower-paid employees and narrowed the wage differentials between these employees and employees of higher ranks. Nevertheless, there were views that SMW had not only pushed up the wages of lower-paid employees, but also induced a knock-on effect on pay hierarchies (knock-on effect). As a result, enterprises had to raise the pay of employees of other ranks to maintain reasonable pay differentials among ranks and within the same sector so as to maintain staff morale of employees of higher ranks and retain these employees, in turn adding further to the labour costs. 4.16 By examining the hourly wage distribution of May to June 2013 and its year-on-year changes, we can assess the impact of the revised SMW rate on wage differentials. The 5th and 10th percentiles of hourly wage in the overall hourly wage distribution increased by 6.9% and 7.8% year-on-year respectively in May to June 2013, higher than the 4.9% increase for the median hourly wage. This signified that the revised SMW rate helped boost up the wages of lower-paid employees and narrow wage differentials (Table 4.2).

The minimum wage increases living conditions for the least well off, which boosts quality of life

Wong 14 [(Hung Wong, Department of Social Work, The Chinese University of Hong Kong; Shengquan Ye, Department of Applied Social Studies, City University of Hong Kong, Kowloon, Hong Kong) “Impact of enforcing a statutory minimum wage on work and quality of life of vulnerable groups in Hong Kong” INTERNATIONAL JOURNAL OF SOCIAL WELFARE] AT

Most studies examining the impact of the minimum wage have centred on economic dimensions, such as employment, negative employment effect and income effect. Few have scrutinised the psychological dimensions, especially the effects on the quality of life of the affected groups and on their job and pay satisfaction. Quality of life (QoL) is a multidimensional and comprehensive concept that reflects the situation and satisfaction of an individual towards different life aspects, including physical and psychological health, family life, social life and financial conditions. Sirgy (2011) reviewed several QoL indicator projects and concluded that QoL could be classified into six major theoretical concepts, namely: socio-economic develop- ment, personal utility, a just society, human develop- ment, sustainability and functioning. Many of these concepts included an economic aspect (income) as one of the QoL domains. Working condition, especially wages, is a relatively straightforward factor that affects QoL because it provides economic security. Income and subjective well-being have been found to be positively related (LaBarbera & Gurhan, 1997). Job pay has been con- sistently ranked as one of the most important determinants of a high QoL in Europe (Clark, 2001, 2005; Haller & Hadler, 2006). Wage increases affect job satisfaction. Based on the British Household Panel Survey, Clark (1999) identi- fied the positive effects of wages and wage increases on job satisfaction. However, no significant effect of the absolute amount of the wage alone was found. Based on the research findings reviewed above, the present study included a wide range of indicators to investigate the impact of the SMW on vulnerable groups in Hong Kong. Aside from common objective measures (i.e., hourly rate and monthly income), QoL, job and pay satisfaction were also investigated in the study. Hypotheses were developed based on the literature review and the local context in Hong Kong. This study examined the effect of the SMW on the work and life of vulnerable groups in Hong Kong. Two major findings were discussed in connection with the existing literature and the local context. First, the SMW induced a positive impact, as it had intended, on several outcome measures related to life and work (e.g., QoL, job and pay satisfaction, and monthly income). Second, the positive impact of the SMW was more prominent for the more vulnerable workers, with fewer working hours and a lower hourly rate. Positive impact of SMW on QoL satisfaction and income Over the years, concerns and debates have been raised as to whether the SMW could really benefit vulnerable groups as was intended. Our findings clearly show that, after the enforcement of the SMW, dramatic increases were experienced in most domains of QoL, job and pay satisfaction, and objective monthly income. These findings indicate the benefits of the SMW without sacrificing employment rate. All these findings provide solid evidence supporting the legislation in Hong Kong. Recently, the Hong Kong government released the 2012 report by the Minimum Wage Commission (2012) which was based on the General Household Survey conducted by the Census and Statistics Department. Although the survey did not particularly focus on the vulnerable groups, the findings were, to a certain extent, consistent. For instance, the report showed an increase in the monthly income by 2.7 per cent among the public from May to July 2012, as compared with the same period in 2011. The percentage was consider- ably higher (8.1%) among the lowest decile group, suggesting that disadvantaged people actually benefitted more from the SMW. The report indicated that although several jobs in different sectors were restructured, the unemployment rate remained generally stable after the SMW, which was consistent with our findings as well.

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