According to my calculations, if this formula had been adopted in 2011, the minimum wage in 2024 would have been approximately HK$41.7 per hour, only slightly higher than it is today. The minimum wage based on the new formula is adjusted every year, so starting in 2011 it will be slightly higher than the minimum wage calculated using the new formula.
The Hong Kong Poverty Situation Report released last year confirmed that Hong Kong’s poverty rate was continually worsening. Low minimum wages are also a contributing factor. The median monthly income of a Hong Kong earner increased from HK$11,300 in 2011 to HK$20,000 in 2023. This is a cumulative increase of 77%. However, the number of minimum wage workers increased by only 43% during this period.
The government should be commended for trying a new approach to setting the minimum wage. Despite the concerns of the business community, the government was able to reach an agreement and find a solution. A new approach to the minimum wage should be seen as a win for everyone.
First, the new formula has gained support from Hong Kong’s grassroots communities, people struggling to make ends meet. It is hoped that the new minimum wage system will create a ripple effect that will improve wages for low-income workers.
Secondly, this formula also shows that employers and employees can find some common ground with the aim of improving workplace relations. Happy employees have a positive impact on business.
Third, this is an opportunity to tell a good story about Hong Kong, showing that Hong Kong is making real progress in caring for the welfare of low-income workers.
Finally, this new approach shows that the government has at least done the right thing and fulfilled one of its promises to have a meaningful impact on communities.
Why can’t the government hire these workers directly? The additional cost is minimal. Moreover, not only the workers but also their families will benefit. Workers should be able to earn a living wage and not rely solely on government support. Creating jobs and paying workers a fair wage is the most effective and sustainable way to lift people out of poverty.
The issue here is responsible governance and the principle that no one should escape their responsibilities. By holding contractors accountable, better practices can be standardised, such as protecting a company’s profits and the well-being of its employees at the same time.
Paul Yip is Chair Professor (Population Health) in the School of Social Work and Social Management, University of Hong Kong.
