• Reduce the income gap between poor and rich
Minimum wage helps to close the income gap between the rich and poor. Although the society still has a significant difference, the minimum wage at least puts a floor in the gap so it does not develop wider. Narrowing this gap is important to maintaining a population with equal freedoms.
In the short term, minimum wage is not effective to reduce the income gap between poor and rich. But in the long term, because of minimum wage, employees can satisfy their basic standard of living, thus their children can concentrate on their studies. Then they will not be low-tech employees who will fight for more wage and position. Therefore, their family will be out of poverty level.
• Protect employees’ wage and dignity
In a high unemployment rate circumstance, employees cannot be able to negotiate with employers about their wage and benefits, thus employers beat down employees’ wage and benefits. Therefore, if government establishes minimum wage law, that can prevent this condition.
• Increase standard of living for lower earners
Minimum wage can help low earners gain a higher standard of living, because they can gain stable wage.
• Maintain social stability
Minimum wage protects low earners’ wage that might able to decline the possibility of social problems caused by low income, for example family violence.
• Improve economy development
Because employees gain stable wage, that can increase their purchasing power. Therefore, that can able to improve each of industries development and increase employment opportunities.
Disadvantages of Minimum Wage
• Increase the cost of business
If government establishes minimum wage, enterprises will increase the cost of business, which will generate many social and economy problems.
• Increase unemployment rate
Because minimum wage increase the operation cost, enterprises may be unable to afford to employ as many workers and may cut down employees for reducing the cost and employees’ work load will be increase.
• Generate price inflation
Enterprises or small businesses increase the cost because of minimum wage, they begin to try and regain the profits. They may reduce products quality, but more commonly they will pass the added expense on to the consumers causing the products they produce to cost more at the store.
• Decrease employment opportunities for teenagers or disables Because teenagers lack of working experience, so businesses are willing to pay a lower wage for teenagers. But if government establishes minimum wage, businesses would rather hire more experience workers than teenagers or disable that will decrease employment opportunities for them and generate many social problems.
• Decrease small businesses development
When businesses need to pay their employees minimum wage, this can make it difficult for the business to grow and expand that may discourage some person to develop small businesses.
• Distort market system
Market unbalance will be generated because of minimum wage. Moreover, every industry has its own wage level. If the government standardize minimum wage, that will generate mismatched of resource, such as generate too high or low of wage in different industries.
• Weaken competitiveness
Because of increase the cost of businesses, that also decreases competitive between companies.
• Discourage further education for low-tech employees
Because employers may not raise employees’ wage, especial for low-tech employees, thus that will discourage further education for them.
There are some recommendation giving to Hong Kong Government and Hong Kong’s enterprises. These recommendations may help to decrease disadvantages caused by establishing minimum wage.
Firstly, the government could encourage future education for low-technology employees, such as providing continuing education fund especial for low-tech employees. If low-technology employees are willing to future education which can be able to find a high wage’s position caused by improving their qualification.
Secondly, the government does not standardize minimum wage in every industries, because every industry has its own wage level. The government could establish Minimum Wage Commission which can discuss with representation of every industry and then evaluate each of industry’s minimum wages. Moreover, it could monitor each of industry should set suitable and proper minimum wage.
Thirdly, the government could encourage small businesses development, It can evaluate each of application of small businesses and provide supporting, such as providing a loan of low interest for small businesses or providing fund for their employees’ a part of wages. That can decrease pressure in paying their employees minimum wage.
Fourthly, the government can encourage enterprises to hire teenagers or disables, for example providing practical training between enterprises and teenagers or disable. That can increase employment opportunities for teenagers or disables.
Besides, Hong Kong’s enterprises should have more social responsibility. In my opinion, actually, because Hong Kong’s enterprises do not concern employees’ living standard and beat down employees’ wage and benefits, the government need to establish minimum wage policy to protect employees’ benefits and basic standard of living, thus employers should provide suitable wage and benefits for employees. Moreover, they provide more employment opportunities for teenagers and disable.