A worker walks past a barricaded entrance to Victoria Park in Hong Kong on June 4, 2020. (ANTHONY WALLACE / AFP)

Hong Kong’s labor sector is demanding an annual review of the city’s minimum wage policy, and that workers be granted subsidies if their wages are not raised.

The minimum wage has been frozen amid the COVID-19 pandemic for the first time since the law took effect a decade ago.

Secretary for Labour and Welfare Law Chi-kwong said the freeze is in response to the city’s “deep recession with an elevated unemployment rate” and to “strike an appropriate balance between the objectives of forestalling excessively low wages and minimizing the loss of low-paid jobs”.

According to the latest government report published in late March, there were 16,500 employees paid the minimum hourly wage of HK$37.5 ($4.83) as of June last year, accounting for 0.6 percent of the local workforce. Previous reports showed more than half of them were in the estate management, security and cleaning services sectors.

The Hong Kong Federation of Trade Unions — the city’s largest labor group with more than 410,000 members — is fuming at the freeze, calling it “unfair and unreasonable” to the grassroots, whose purchasing power will be eroded by inflation.

Dennis Leung Tsz-wing, a member of the federation’s Rights and Benefits Committee, said in a petition campaign that they’ve been lobbying for subsidies for workers living on minimum wage to ensure their quality of life.

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If the government insists on freezing the minimum wage level at HK$37.5, it should offer subsidies accordingly to make up for the loss of actual purchasing power, he said.

Leung took Law to task, arguing that the loss of some 20,000 low-paid jobs is too little to affect the entire labor market, and the government will only need to set aside HK$100 million a year to subsidize workers for a rise of HK$2.

Megna, a 19-year-old dishwasher at a restaurant in Yau Tsim Mong district, said she’s saddened by the freeze, which she thinks might undermine her living conditions as prices of everything have gone up.

Megna works 10 hours per day, five days a week. In her view, a minimum wage of HK$45 per hour is reasonable and would make her life easier.

The Minimum Wage Commission is required to review the wage level every other year, which means the current level at HK$37.5 would probably last as long as four years after it took effect in May 2019.

The HKFTU also urged the government to review the level annually, and adjust it in accordance with the city’s median income in order to narrow the wealth gap.

Peace Wong Wo-ping, chief officer of the Hong Kong Council of Social Service, said a desirable minimum wage should be HK$43 to HK$45 per hour, saying many developed economies have set their minimum wage levels at about 60 percent of median income.

The median hourly wage in Hong Kong in mid-2020 was HK$74.4.

Wong said that the average pay at the lower end of the labor market will not be affected by any proposed increase in the minimum wage, because its current base is too low and only a very small portion of the labor force are paid under it.

According to a survey published in mid-February by the Hong Kong Public Opinion Research Institute, 42 percent of the 4,753 respondents were against the freeze, while 57 percent said that the minimum wage should have been raised to at least HK$40 per hour. About 22 percent agreed that amount should be set at HK$40.

The Chinese Manufacturers’ Association of Hong Kong — a local nonprofit industrial organization with about 3,000 member companies — is on the other side of the fence, saying that freezing the minimum wage will give the city’s pandemic-battered businesses some “breathing space”.

“The government should shelve all its work related to the implementation of policies that may increase operational costs. In addition to freezing the minimum wage, the government should think twice about increasing the number of statutory holidays to match public holidays,” said association president Allen Shi Lop-tak.

Defending the freeze, the Minimum Wage Commission said the purchasing power of the grassroots has not been affected because the rate of the last pay rise was higher than the inflation rate during the same period. The last increase by 8.7 percent took effect in May 2019, from HK$34.5 in 2017.

It’s unsatisfactory without any wage increase over a stretch of four years. The government should start reviewing the minimum wage level when the economy recovers or inflation returns in the second half of this year.

Lam Chun-sing, President, Federation of Hong Kong and Kowloon Labour Unions

Hong Kong’s composite consumer price index surged by 2.4 percent and 2.9 percent in 2018 and 2019, respectively. It plunged to 0.3 percent last year during the economic downturn fueled by the pandemic. Underlying consumer price inflation is forecast at 1 percent for this year, the government said.

Lam Chun-sing, president of the Federation of Hong Kong and Kowloon Labour Unions, said although inflation has been moderate in the past two years, the grassroots can hardly maintain their purchasing power and living conditions, with daily expenses, such as public housing rents, continuing to go up.

The biggest expenditures, on food and public housing rent, grew way faster than the overall figure and hit 4.9 percent and 7.1 percent in 2019, and 3.4 percent and 7.1 percent in 2018.

Meanwhile, the median income level during the same period increased by about 10 percent, indicating the local wealth gap could have widened.

Although only 16,500 people were paid the minimum wage as of June last year, there were 139,800 workers in Hong Kong who got HK$41 per hour or less, accounting for about 5 percent of the working population.

Lenny, a 52-year-old woman who worked for a currency exchange store in Sham Shui Po, said she was paid HK$40.7 for her six-day, nine-hour job and was struggling to make ends meet. To make matters worse, she lost her job in late February.

She said the prices of some daily necessities have risen sharply since the pandemic began. Members of her family, who live in a public housing flat for a monthly rent of HK$2,578, are looking for new income sources while applying for government subsidies to help tide them over.

“It’s unsatisfactory without any wage increase over a stretch of four years. The government should start reviewing the minimum wage level when the economy recovers or inflation returns in the second half of this year,” said Lam.

Contact the writer at jefferygu@chinadailyhk.com