Recently, starting from May 1, 2013, Hong Kong had issued an increase of the Statutory Minimum Wage (SMW) from $28 to $30. Setting SMW at an appropriate level is vital to striking the balance between the objectives of forestalling excessively low wages and minimising the loss of low-paid jobs, while sustaining Hong Kong’s economic growth and competitiveness ("2012 report of the minimum wage commission," 2012). To fulfil this aim, the government have decided to increase the minimum wage rate in order for the people receiving the low-paid jobs to have a more fair salary.
This paper will first discuss about the stakeholders that will be affected by the increase of the wage rates namely the workers earning the SMW rates, the employees earning above the minimum wage, the firms, the government and the society as a whole. All of the effects of this social policy, both positive and negative that will be implied to these stakeholders will be discussed. Then, the effects of this social policy will be compared with R. Titmuss’ teachings in the objectives of a social policy. Finally, an evaluative comment of what the government should have done to maximise the benefits of this policy and minimising its drawbacks will be given as a conclusion.
Effects on Stakeholders
The first stakeholder that will be most affected by this social policy is the workers living by the SMW rate. These workers are usually blue-collared workers whose jobs require minimum requirements and manual labor. The minimum wage is used to provide a wage floor for them not to be exploited by the firms, but these workers are usually still the lowest paid amongst the society. They are referred to as the working poor in which the workers are still living below the poverty line of Hong Kong even when they already have a job. As shown by Lam (2013) At the article which has been released by the Commission of Poverty, Hong Kong had just implemented the poverty line in which a one-person household is living at below HK$3,600, two-person households living below HK$7,700, and four-person households living below HK$14,300 monthly. In Hong Kong, around 19.6 percent of the population were living with less than the poverty line at the year 2012.
By the increase of the minimum wage by roughly 7%, the government wanted to tackle the problem of the working poor especially with the rising costs due to inflation and rapid increase in the price of land. According to the Trading Economics (2013), from the year 1981-2013, Hong Kong’s inflation rate have averaged at 4.6 percent while the Global Property Guide (2013) showed that the price of properties in Hong Kong had skyrocketed by 73% over the past 3 years. These rising costs had brought problems to the workers living in the SMW as they usually do not experience an increase in their salaries if the government does not intervene. Their living standards will constantly fall every year and in order to prevent that from happening, the Hong Kong government implemented the increase in the SMW at May 1, 2013.
The first time Hong Kong had provided the Statutory Minimum Wage of $28 is at 2011. According to Oxfam’s report on April 17, 2012, “59.5 per cent reported no improvement with the introduction of the Ordinance”. Oxfam (2012) explained that even when 70 per cent of the low income workers experienced increased wage rates, the employers reduced the remuneration packages, paid rest days, and working hours. Overall, it leads to similar income when the Ordinance have not been introduced which does not lead to any increase in the standard of living of the working poor. This might reoccur with the increase of the SMW, as the employers would want to cut back on the costs. The increase of the minimum wage in Hong Kong might not lead to an increase in the total income of the workers, but might only lead to a shorter working hours or even a decrease in their total income.
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