Minimum Wage Raise May Put Workers on Furlough, Labor Advisory says

Local | 27 Sep 2020 6:00 pm

Raising the minimum wage may force employers to put low-income workers on furlough, Labor Advisory Board member Kwok Chun-wah said.

In effect since May 2011, the minimum wage undergoes a review every two years and is likely to be frozen at its current level of HK$37.50 per hour until May 2023.

Kwok said yesterday raising the wage would result in greater operating costs andlower business confidence.

He said employers cannot guarantee an increase in a pandemic-battered economy, with the Minimum Wage Commission failing to reach a consensus for the level in the coming year.

“The consequence of failing to reach a consensus will be a freeze,” he said.

“The discussion alone can let society and relevant stakeholders understand that both employers and employees are relying on each other due to financial hardships.”

A better approach to help low-income workers would be the Community Care Fund rolling out programs that are catered to individuals instead of raising the wage, he said.

Kwok also said that if the economy was to “bounce back” in the post-pandemic period before the minimum wage’s next review, employers would definitely recruit people with a higher salary at the time.

Kwok also said catering and retail are among sectors that will be hit hardest in the absence of a third round of Employment Support Scheme aid.

That came after Chief Secretary Matthew Cheung Kin-chung said the government had no intention of rolling out a third round of wage subsidy scheme for now, adding that the focus should be on battling the pandemic so as to revive the economy.

Kwok said that the condition in which some enterprises under these sectors will close down is likely to worsen after November -- if the pandemic remains volatile.

He said that around less than 10 percent of the catering sector can still generate profits from doing takeaways or other low-cost operations, amid infection control measures taking place in eateries.

Kwok also said that he was not optimistic about the business of the aforementioned sectors during peak seasons, such as the upcoming new year’s eve.

“Unless enterprises can come up with ways to change the way they operate, or else they have to make some tough decisions,” he said.

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