Minimum Wage Law in Hong Kong A Blessing or A Curse?

Minimum Wage Law in Hong Kong A Blessing or A Curse?

Li Hei Lui 10643206
RCS 0011 Thought and Writing
Hong Kong Baptist University
College of International Education

Abstract
The Minimum Wage Law in Hong Kong will be carrying out on 1 st May 2011. The

Minimum Wage Law in Hong Kong A Blessing or A Curse?

controversial proposal of minimum wage law has been widely discussed within the local
community. Is the minimum wage law in Hong Kong a blessing or a curse?

Minimum Wage Law in Hong Kong A Blessing or A Curse?

Minimum wage refers to the least amount of salary paid to workers of a country, either
on an hourly, daily or monthly basis. It can be set at a uniform level applied to all industries

Minimum Wage Law in Hong Kong A Blessing or A Curse?

or a tailor-made level for a particular sector. This is to protect employees from being
exploited in the prevailing national economic and social conditions. In the world, there are
about 90% of countries having statutory minimum wage, for example, United Kingdom,
United States of America and Australia etc. Such prevalence does somehow acknowledge the
benefit brought about. Though, minimum wage law should in no way be adopted for its farreaching adverse impacts to the economy of Hong Kong.

The very first potential drawback is the likelihood of a surge in unemployment rate as
those with a lower productivity will be driven out of the market. In Hong Kong, many lowskilled workers perform labour intensive works such as dish cleaning and guarding which do
not require professional knowledge. The only criterion which makes those workers capable of
the job is acceptance to low wages. Raising the wage level legitimately may
increase income of some workers, but not all of them. Many of them may end up losing their
jobs as employers would be reluctant to hire as many labour as at the market level.

Not only would employees suffer, but also employers business. Small businesses will
gradually be driven out of the market as they cannot cover the surge in labor cost which
prompts them leave the market. In Hong Kong, the small and medium sized enterprises
account for over 98% of the total business units and offer job opportunities to over 1.2
million people, which are about 50% of the total employment. Without them, it is likely that

Minimum Wage Law in Hong Kong A Blessing or A Curse?

the local economy would be dampened.

Apart from the concerns mentioned, inflation is another issue that matters for both
employers and employees. Inflation is likely to occur as prices of goods and services are
raised by the business sectors to compensate the additional labor costs incurred. In Hong
Kong, if not the whole world, is severely affected by the persistent rise of the general price
level, burdens of citizens will only be further increased, particularly in the present stage
where economic downturn is drawing nearer.

While the potential benefits brought about by the minimum wage law could hardly be
ignored, the detrimental effects indeed far outweigh the good that brought about. Minimum
wage law is looks like rather a curse than a blessing. It is for the sake of Hong Kongs
sustainable social and economic development that such a law should not be imposed.
Anyway, the result of the minimum wage law in Hong Kong is a blessing or a curse will be
drawing in the very soon future.

Resources

The Labour Department (HKSAR), http://www.labour.gov.hk/eng/news/mwo.htm