10. In the
beginning
•Rejected the motion by LEE Cheuk-yan’s motion for
imposing minimum wage (MW) in 1999
Later on……
•Donald Tsang announced the launch of Wage Protection Movement
(WPM) for cleansing workers and security guards in 2006
•Result of the Movement was found to be unsatisfactory
Finally……
• Government agreed to proceed the legislation
work on minimum wage in 2008
11. Employers forced to pay higher share of their
profit margin (Asia Monitor, 2010)
Profit decreased if don’t take any cost-saving
action like:
reducing employee benefits
cutting number of workers
outsourcing operation to cheaper destination
automated labor process
Therefore in fact employers don’t agree!!
12. However, survey by Liberal Party (2010) shown
56.2 % support MW, 11.7% more than last
year.
Reasons: Legislation of MW already a factual
reality
A study in Denmark and New Zealand (Colm
McLaughlin,2009) shown that MW can:
Help retention of employees
Improve recruitment
Increase productivities
Encourage employers to invest in training
Change the entire business sector toward a
more “productive system” with high quality
(Wilkinson, F. 1983 )
13. According to Fred Foldvary (2010)
Create unemployment
Job seekers > job vacancies
Especially for Unskilled worker (e.g. cleansing
workers & security guards)
In order to offset the higher operation cost,
employee’s health or pension benefits will also
be cut (Royalty, 2000)
MW will decrease the welfare of employee!!
14. However a survey by Oxfam Hong Kong in 2010 indicates
>70% support MV
it reduce the poor-rich gap
enable workers to earn enough to support the family
Sabia, Joseph J. and Burkhauser, Richard V (2010) also agree
MW
increase quality of life
more than a wage floor
achieve a more equitable distribution of income (Oren
Levin-Waldman, 2009)
Motivate employees to work harder
therefore increase the productivity
16. For a businessman, 2 ways to do for compensation:
1. Open Source
e.g.: (a) Increase in price
(b) Increase the width of market
2. Cut cost
e.g.: (a) Procurement of inferior quality
(b) Layoff employees
(c) Modify the working hour
Customer
17. Cut cost:
1) Is it possible to layoff employee?
For an efficient company:
Fully utilization of resources and labor
Output with poor quality and quantity
2) How about eliminating wages for meal hour?
Cut wages or benefits
Employees regard these actions as theft of
their property right in the job
Get less motivation and reduce work effort
Poor-quality service and product
e.g.: greater absenteeism or calling in the union organizer
(Perlman 1928; Polanyi 1944)
18. Open source:
Would you mind paying $1 more?
Leader member exchange THEORY
Employees receive more salary
Reciprocate Employers by showing more
commitment to the company and motivation
Better quality and quantity of service or products
Better relationship between employees and
customer
Better relationship between employees and
employers
(Polyanyi 1944; Kaufman 1999b)
19. - Many HK people were unsatisfied with the
action of Café De Carol to eliminate the wage
for meal
- HKCTU and other 35 organizations proposed
to call a strike to stop patronizing Café De
Carol in HK and affiliated restaurants in US
and Canada
20. -cancel the policy
-emphasize three “NO”
1. No increase in price
2. No lay off
3. No eliminating wage for meal time
However, the cost would increase 120millions
7000 of 16000 employees are under wage of $28
Relative increase of other employees with higher
qualification
21. Alternatives to compensate the increased cost
rather than cutting the benefits of the employees:
1. Consider to install auto-selling ticket machine
2. Hire less people when expanding the business
3. Central process of food materials and sauce
Cut down wages is not the only remedy for high
cost production!!!
22. The minimum wage would increase the operation cost
lower revenue and return
Less will to make investment
Separation of ownership and control (Altman 2001)
Investors (owners) : maximum profit
Salaried managers: utility maximization
The managers would tolerate organizational slack
find equivalent cost savings in other areas
Treat employees as costs or resources?
Cost : would try to eliminate as much as possible
Resources: would believe the increased investment in the
employees would return increased profit
23. Other possibilities:
1. Filtration of inefficient companies
The companies which only take advantage on low
wages would be driven away
companies with higher efficiency would be
remained
(can generate revenue better)
2. Economic growth
Paying at a living wage (minimum wage) produce
profitable consumers
help to boost the economy
24. All stakeholders are for the legislation
Only a small part of the stakeholder against
Argument of the opposite side is not valid
Minimum wage is beneficial in long run
No economy harm
A factual reality
Debating on the amount & detail
25. Comprehensive discussion
Consultation document
Face to face discussion
Involvement of experts
Implementation of industry
Implementation of job category
26. Asia Monitor. 2010. Minimum Wage Will Likely Lead To Job Losses. China & North
East Asia, Vol. 17, No. 9, pp. 6-7
China CSR. 2008. Hong Kong Plans Minimum Wage Legislation
http://www.chinacsr.com/en/2008/10/16/3369-hong-kong-plans-minimum-
wage-legislation/
Colm McLaughlin. 2009. The Productivity-Enhancing Impacts of the Minimum Wage:
Lessons from Denmark and New Zealand. British Journal of Industrial Relations, Vol.
47, No. 2, pp. 327-348.
Eva Liu and Jackie Wu, 1999. Minimum Wage Systems, Legislative Council
Secretariat, RP08/98-99.
Neumark, David, and William Wascher, 2001. “Minimum Wage and Training
Revisited”. Journal of Labor Economics, Vol. 19, No. 3, pp. 563–95.
Oren Levin-Waldman. 2009. “The broad Reach of the Minimum Wage”. Challenge,
Vol. 52, No. 5, pp. 100-116
Oxfam Hong Kong. 2010. Survey on Minimum Wage and Standard Working Hours.
http://www.oxfam.org.hk/txt/en/news_1092.aspx
Royalty, Anne. 2000. “Do Minimum Wage Increases Lower the Probability That Low-
Skilled Workers Will Receive Fringe Benefits?” Working paper, Indiana
University–Purdue University Indianapolis, and Stanford University
Sabia, Joseph J. and Burkhauser, Richard V., 2010. Minimum Wages and Poverty:
Will a $9.50 Federal Minium Wage Really Help the Working Poor, Southern
Economic Journal, Vol. 76, Issue 3, p592-623
Liberal Party. 2010. SME Survey on Minimum Wage.
http://www.liberal.org.hk/contents/index.php
Wilkinson, F. 1983. Productive systems. Cambridge Journal of Economics, 7: 413-
429