The minimum wage has always been a controversial issue. Supporters say that it prevents excessively low wages whilst opponents contend that it is detrimental to a free economy and may mean fewer jobs for the least competitive workers.

Arguably, there is no empirical evidence to suggest that there is a necessary correlation between economic freedom and a statutory minimum wage. Nor are the two mutually exclusive. Many of those economies high in the pecking order of economic freedom have a SMW in place.

We are fully aware that as an externally oriented economy with a linked exchange rate system, flexibility of wages and prices is crucial to our economic competitiveness and resilience to external shocks. Nevertheless, safeguarding the interests of the vulnerable and enhancing social harmony are equally important policy objectives.

The question boils down to whether we can strike the right balance.

Overseas experience has indeed indicated that the possible economic downside of a SMW can be mitigated through careful design.

Our aim is to arrive at an optimal minimum wage which provides an hourly wage floor to forestall excessively low wages without, at the same time, unduly affecting our labor market flexibility, economic growth and competitiveness as well as causing significant loss in low-paid jobs.

A Provisional Minimum Wage Commission has been set up to advise on the initial SMW rate. It will adopt an evidence-based approach through data research and analysis as well as extensive consultations with stakeholders. The holistic interest of the community and a basket of social, economic and employment factors that are relevant to, or affected by, the SMW level will be fully taken into account.

On the coverage of a SMW, after extensive consultation and thorough consideration, we consider it necessary to exempt two categories of employees: live-in domestic workers and certain student interns.

Live-in domestic workers' distinctive working patterns and the in-kind benefits they enjoy are two major considerations for the exemption. The multifarious nature of domestic duties of live-in domestic workers, their round-the-clock presence plus the fact that the workplace is also their rest place render it difficult to bring them under a SMW which is calculated on an hourly basis. Simply put, it would be impossible to ascertain the actual hours worked so as to determine the wages to be paid.

Besides, the provision of free accommodation by employers means that live- in domestic workers are spared the most costly living expense items, as well as home to workplace travel and food in most circumstances. These in-kind benefits are not enjoyed by non-live-in workers.

In the case of foreign domestic helpers, apart from free lodging, they also enjoy free food or food allowance, free medical benefits, and free passage to and from their place of origin. They have, since 1973, been protected by the minimum allowable wage. Though administratively set, the wage is mandatory and underpayment is enforceable as an offense under the Employment Ordinance.

Let me stress that we fully recognize the sterling contribution of foreign domestic helpers. They are a valued part of our workforce. The proposed exemption is appropriate in the Hong Kong context and there is no question of any discrimination against them.

For student interns, exemption is provided for those internships forming a compulsory or elective part of their programs and required for the award of the academic qualifications in full-time locally accredited programs as arranged or endorsed by specified education institutions. This strikes a fine balance between preserving students' internship opportunities and preventing abuse and possible displacement of elementary workers.

The bill also proposes a special arrangement for persons with disabilities. Upon the request of employees with disabilities, a simple mechanism assessing their productivity in an authentic workplace would be carried out to determine if they should be remunerated at the SMW rate or a rate according to their productivity.

In tandem with Legco's scrutiny of the bill will be data collection and processing by the Census and Statistics Department to support the setting of an appropriate initial SMW rate. Allowing time for the commission's deliberation and around six months for employers to gear up for the implementation of the SMW following the enactment of the bill as well as the passage of legislation to give legal effect to the initial SMW rate, the SMW will then come on stream.

The government has honored its pledge to legislate for minimum wage. This represents a significant milestone and breakthrough in protecting the well- being of our grassroot workers. We will chart our way forward prudently and with a sense of proportion to bring this to fruition.

Matthew Cheung Kin-chung is secretary for labour and welfare