An Open Letter to the Provisional Minimum Wage Commission

 In Minimum Wage, Welfare & Labour
,

Dear members of the Commission,

 

We understand that you consider the British minimum wage model to be more relevant to Hong Kong than other models. In this connection, we would like to draw your attention to the following principles and considerations of the British Low Pay Commission and urge you to adopt the same for setting Hong Kong’s minimum wage level.

 

  1. The minimum wage must make a difference for low-pay workers.
  2. The minimum wage must remove gross exploitation.
  3. Economic competitiveness and growth depend on a range of factors other than costs of labor. Competitiveness can also be achieved through innovation, good management, well-targeted capital investment, and the development of worker skills.
  4. If firms compete simply on the basis of low pay, this could “lead to a damaging downward spiral of low wages and poor standards, which is detrimental to both businesses and workers.”
  5. Firms pursuing a high productivity strategy would be unfairly undermined by competitors relying on low-wage employment.
  6. Social welfare could render it possible for some firms to depress wages and thereby transfer operational costs to taxpayers. The consequences of low wages would therefore be taxpayers being called upon to subsidize wage exploitation and efficient firms having to compete unfairly with inefficient ones.
  7. Thus, in addition to protecting low-wage workers, the minimum wage should 1) protect reputable firms from being undercut by competitors solely on the basis of depressed wages; 2) protect the taxpayer from having to subsidize wage exploitation; and 3) encourage firms to compete on the skill of labour and product quality.

 

If these principles and considerations can be incorporated into your deliberations, we believe the minimum wage level to be recommended by you for Hong Kong would probably not be less than $30 per hour. Indeed, our research indicates that the minimum wage should be no less than $30 per hour.  (Details of our research can be found at <http://www.hkdf.org/pr.asp?func=show&pr=198>.)

 

 

Yours sincerely,

Hong Kong Democratic Foundation (香港民主促進會)

The Professional Commons (公共專業聯)

July 2010

 

 

The Chinese version of this open letter was issued as an advertisement in Ming Pao and Hong Kong Economic Journal Daily in July 2010.

 

 

 

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