HONG KONG — Hong Kong passed its first-ever minimum-wage law Saturday, a rare departure from the wealthy Chinese financial hub’s free-market philosophy. The move was hailed by union workers as a victory for the territory’s underpaid working class.
No rate has yet been set, but it appears employers will be required to pay at least $3 an hour — well short of the rates in the West and low for one of the most expensive cities in the world.
Thousands of foreign live-in domestic workers also will be excluded from the deal.
But legislator and union organizer Lee Cheuk-yan said it was symbolic, showing that the city was saying “goodbye to shameful wages and embraced social justice for workers.”
“This means goodbye to unfettered capitalism,” he said.
China decided to preserve Hong Kong’s capitalist system when Britain returned the territory in 1997. The Beijing-appointed government continued to resist a minimum wage in the name of keeping labour markets free.
But under pressure to address the city’s widening rich-poor gap after a voluntary wage protection initiative failed, leader Donald Tsang in 2008 reversed government policy and started efforts to introduce a minimum wage.
Although he praised the law backed by pro-business legislators, Lee said it is highly limited, leaving much discretion in the hands of the territory’s leader, who is traditionally allied with the business community.
The Hong Kong leader is empowered to recommend a minimum wage level, which the legislature can approve or reject but can’t amend. Once the level is set, the law requires the wage level to be reviewed every two years — instead of the annual review demanded by unions.
The Hong Kong administration excluded the nearly 280,000 mostly Filipino and Indonesian domestic workers on the grounds that it is difficult to calculate their work hours given the round-the-clock nature of their jobs, also noting they are promised benefits like housing, food, medical care and free travel to their home countries.
They are currently promised a monthly minimum wage of 3,580 Hong Kong dollars ($450).
Any minimum-wage law “must balance the interests of every party,” Secretary for Labour and Welfare Matthew Cheung told legislators Saturday.
Tsang will propose the first minimum wage level in November, Cheung said. The current consensus ranges from the HK$24 ($3) an hour backed by business interests to the HK$33 ($4) demanded by local unions — about the average price of a fast-food meal.
The federal minimum wage in the United States is $7.25; in Britain, it’s 5.80 pounds ($9); in Canada, it ranges from 8 to 10.25 Canadian dollars ($7.6 to $9.7) depending on province; in New Zealand, it’s 12.75 New Zealand dollars ($9).
Hong Kong is one of the world’s richest territories with a 2008 per capita GDP of $30,863, but is also among the most stratified economies. It came last in income equality among 38 countries and territories the United Nations Development Programme’s 2009 Human Development Report ranked as the world’s most advanced.