Raising the minimum wage to HK$36 an hour is both needed and affordable
George Cautherley does the sums to show that raising the minimum wage to HK$36 an hour will not only help low-wage earners make ends meet, but is also affordable for businesses
The public consultation on the review of the statutory minimum wage has ended. Among the 200-plus proposals submitted, some 40 per cent reportedly suggest freezing the wage at the current HK$30-per-hour level next year. That idea is most objectionable, for a number of reasons.
Let us look first at inflation rates. The first minimum wage introduced in May 2011 was HK$28 per hour. It was then increased to HK$30 per hour in May 2013, a rise of 7.1 per cent.
As a comparison, the accumulative inflation rate in 2012 and 2013 was about 8.6 per cent. Thus, as of the end of last year, inflation had already nullified the wage rise in 2013. In fact, in terms of purchasing power, the minimum wage as of last December was actually less than HK$28 per hour.
With prices continuing to rise, this purchasing power will further erode if the minimum wage is frozen at HK$30 per hour.
Next, income growth statistics in the past two years show that the 7.1 per cent rise in 2013 lagged behind general wage growth, as well as economic growth in the same period.
All these figures point to one fact: wage earners at the bottom of the scale received the smallest share of the fruits of economic growth in the past two years. Apparently, the trickle-down effect is just a myth.
