Furlough fear if wage rises

Local | Erin Chan 28 Sep 2020

Erin Chan

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

In effect since May 2011, the 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 and lower business confidence.

Employers, he said, 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 that will be a freeze," he said. "The discussion alone can let society and stakeholders understand that both employers and employees are relying on each other due to hardships."

A better approach to help low-income workers would be a rollout by the Community Care Fund of programs catering to individuals instead of raising the wage, he said.

Kwok also said that if the economy "bounced back" in the post-pandemic period before the wage's next review, employers would definitely recruit people with a higher salary at the time.

Catering and retail are among sectors that will be hit hardest in the absence of a third round of Employment Support Scheme aid, he said.

That came after Chief Secretary Matthew Cheung Kin-chung said the government had no intention of rolling out a third round of wage subsidies for now with the focus being on battling the pandemic so as to revive the economy.

Kwok said conditions for some enterprises in these sectors are likely to worsen after November - if the pandemic remains volatile - and cause them to close down.

Less than 10 percent of the catering sector can still generate profits from takeaways or other low-cost operations.

Kwok also said that he was not optimistic about business for the two 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, otherwise they have to make some tough decisions," he said.


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