“The government agrees that the adoption of a formula for adjusting the minimum wage rate will enhance predictability and transparency, thereby reducing contention in the community. The government also believes the new review mechanism is in line with the overall interests of Hong Kong.”

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The changes made to the review are the first in 13 years since Hong Kong introduced the statutory minimum wage in 2011 to provide protection for low-paid workers.

The new mechanism is expected to take effect next year, when the rate is due for review. The review will become an annual exercise in 2026 and be assessed five or 10 years after implementation.

Under the mechanism, the formula for calculating the wage level each year will include factors such as the consumer price index (A), gross domestic product growth and average GDP growth over the past 10 years.

The index reflects changes in the cost of consumer goods and services generally bought by households. Index (A) relates to about 50 per cent of households, which are in the relatively low expenditure range.

The annual adjustment rate will be the consumer price index (A) plus 20 per cent of the difference between the latest real GDP growth and the trend growth in the past decade, and subject to a cap of 1 percentage point.

If the formula produces a negative number, the minimum wage will be frozen.

Commission chairwoman Priscilla Wong Pui-sze stressed members had done their best to deliver a formula which prevented any wage cuts for workers in times of adversity while ensuring they could enjoy the economic fruits in good times.

“We have each other in our hearts. We have done our ultimate best as we have achieved absolute consensus from all 12 members. This is not easy,” she said.

“Basically it provides a formula whereby the grass-roots workforce in Hong Kong, comprising about 0.6 per cent or 17,000 people, will see their annual increase in their salaries not less than the CPI (A) index.

“And even if there were a negative growth, they will not be suffering a decrease.”

Sun, the labour chief, insisted the new formula would take care of the welfare of the low-income workforce as food and daily necessities had a bigger weight in the CPI (A) index.

“This is just the best index, so that it takes full care of the needs and also the welfare of those receiving the minimum wage,” he said.

Sun also said the new mechanism would not affect Hong Kong’s competitiveness as it only sought to take care of a minority, the 17,000 on the minimum wage.

“The design of the minimum wage mechanism is to make sure that while we remain competitive, we have to also take care of the needs of those at the very lower level. We are just talking about a small number of workers,” he said.

“Employers can afford the minimum wage increase because any increase will indicate rising prices and economic growth which also indicate a profit for bosses.”

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NGO the Society for Community Organisation and 18 other groups said the reforms were better than none and more needed to be done to improve workers’ livelihoods.

They urged the government to refer to overseas experience by fixing the minimum wage at a range between 50 per cent and 66.7 per cent of the annual median income of Hong Kong workers to resolve the ultimate problem of low pay.

The Hong Kong General Chamber of Commerce said conducting a yearly review based on objective data might help to determine if any adjustment was required in uncertain times.

“To that end, both employers and employees must come together to drive growth while sharing the fruits of their labour,” it said.

On May 1 last year, the minimum wage was raised to HK$40 an hour, an increase of about 6.7 per cent.