Human Resources Management: How to Improve Minimum Wage Policy Management in Hong Kong
The objective of this research is to analyze the advantages and disadvantages of minimum wage legislation in Hong Kong. When hike minimum wage can help lower skilled worker. This study will conduct an evaluation of the minimum wage hiking and how it can help the lower skilled workers and will additionally compare benchmarking minimum wage legislation with other countries, for example the standard of minimum wage.
Following minimum wage legislation the primary problems that employers and employees faced included for employers the turnover rate of lower-wage workers and how to reduce the cost of training that affects the quality of service and the working attitude and behavior of employee lack of enthusiasm. For employees problems included the increase in the unemployment rate and reduction in fringe benefits including such as medical insurance. Included in this study will be the varying policies on minimum wages in other countries including multiple minimum wage rates, differentiated standards of minimum wage by industry and type of work performed.
Research questions in this study include those which pose the questions stated as follows:
(1) What are the different policies of various countries on minimum wage standards?
(2) How are the varying levels of minimum wage based on type of work performed determined?
(3) Since some countries have prescribed minimum wages for different population groups to ensure their specific needs are met, how fair are these policies and are these policies on minimum wage effective?
The methodology of this study is qualitative in nature and is such that examines the literature in this area of inquiry.
Definition of Terms
(1) Minimum Wage: Defined by the International Labor Organization as “the minimum sum payable to a worker for work performed or services rendered, within a given period, whether calculated on the basis of time or output, which may not be reduced either by individual or collective agreement, which is guaranteed by law and which may be fixed in such as way as to cover the minimum needs of the worker and his or her family, in the light of national economic and social conditions.” (Varkkey and Korde, 2012)
The work of Partridge and Partridge (2012) reports that there have been several studies conducted recently that have presented challenges to the tradition al idea that minimum wage raises brings about a reduction in employment. Partridge and Partridge state that the conventional view on raising the federal minimum wage has been held to be a way to reduce poverty and to make provision of a living wage’. (Partridge and Partridge, 2012, p. 393) The declining value of the real minimum wage in the 1980s is reported as identified as potentially resulting in 30% of the increase in wage inequality. Inflation serves to erode the fixed minimum wage, every few years there are reported to be calls to increase state and federal minimum wage rates which holds the minimum wage issues at the forefront of policy discussion.” (Partridge and Partridge, 2012, p. 393)
Economists have issued warnings that raising the minimum wage has had “deleterious consequences including losses in employment reduced general training and off-setting reductions in fringe benefits.” (Partridge and Partridge, 2012, p. 393) It is held by traditional views that losses in employment should be among those who are less-skilled workers and that the minimum wage is expected to benefit.” (Partridge and Partridge, 2012, p. 394) It is reported that the standard minimum-wage model is the primary supply and demand model and it is reported that the imposition of a wage floor “in its simplest form…above the equilibrium wage reduces employment, although the real-world complexities such as the incomplete minimum wage coverage can complicate the analysis.” (Partridge and Partridge, 2012, p. 394)
The monophony labor market model is reported to recently been the focus of attention in the debate over the minimum wage. It is reported that from this view if the employer is constrained with the supply of labor then increases in minimum wages results in gains in employment. Reported as the result of the increase of minimum wage is one that cannot be foreseen with a theoretical absoluteness therefore the issue of minimum wage being raised is stated to be an issue that is empirical in nature.
Siu and Lam (2013) reported that there is disappointment among union members in Hong Kong since the new minimum wage “is still only UK$150 more than it was 15 years ago and predict it will deepen the shortage of recruits.” (p.1)
Sui and Lam (2013) report that for domestic helpers who had entered into contracts the minimum wage rate would increase by HK$90 per month following the decision of the government. The new monthly minimum wage is reported to be HK$4,010 and for helpers whose bosses fail to provide sufficient food the monthly allowance would be raised by HK$45 to HK$920 per month. The unions of helpers stated that following the reductions and freezes in the statutory minimum wage during hard economic times the wage is only HK$150 per month above the level of 1998.
The report states that the minimum wage for foreign domestic helpers in Canada is the same as for local workers. In addition, New York and California have both approved a bill of rights to provide the same level of minimum wage to locals and foreign domestic workers. The minimum wage in Canada is different among provinces reported at about HK$75 per hour and in Taiwan and Singapore the monthly wage are reported at “HK$4,100 and HK$3,000 respectively.” (Sui and Lam, 2013) There are presently in excess of 300,000 helpers which are foreign in Hong Kong which have come from the Philippines and Indonesia. The governments of Manila and Jakarta are reported to be discouraging their citizens from working in other countries and the result is that Hong Kong has had to turn to Bangladesh for recruiting new workers.
It was reported by the Association of Corporate Counsel in the work of Lovells, et al. (2013) that the “Minimum Wage Ordinance (Cap. 608) (the “Ordinance”) came into force on 1 May 2011 and introduced a statutory minimum hourly wage rate of HK$28. With effect from 1 May 2013, the statutory minimum hourly wage rate will be increased for the first time to $30 per hour, an increase of 7.1%.” (p.1) It is stated that the Minimum Wage Commission “is tasked by the Ordinance to make recommendations to the Chief Executive regarding the statutory minimum wage rate at least once in every two years. When doing so, the Commission must have regard to the need to maintain an appropriate balance between the objectives of forestalling excessively low wages and minimizing the loss of low-paid jobs and to sustain Hong Kong’s economic growth and competitiveness.” (Lovells, et al., 2013, p.1) In the Commission’s 2012 report published in October a recommendation was made of an increase “of HK$2 in the statutory minimum wage rate.” (Lovells, et al., 2012, p.1) The Commission’s report stated the following estimations:
(1) Although the number of employees earning an hourly rate below HK$30 in May to June 2011 was 327,200 accounting for 11.7% of all employees, the number of employees affected by the increase might be less; (Lovells, et al., 2012, p.1)
(2) The recommended amendment would increase the total additional wage bill to around HK$2billion (an increase of 0.3%); ( Lovells, et al., 2012, p.1)
(3) The overall unemployment rate would increase by about 0.3%; and (4) The Composite Consumer Price Index would go up by about 0.3 to 0.4%. (Lovells, et al., 2013, p. 1)
The Chief Executive in Council is reported as having adopted the proposals of the Commission and the amendments to the Ordinance and the Employment Ordinance (Cap 57 were stated to have been “gazetted and tabled.” (Lovells, et al., 2012, p.1) The Ordinance is reported to be such that provides coverage to “all employees, except live-in domestic helpers, student interns, and work experience students during a period of exempt student employment.” (Lovells, et al., 2012, p.1) The calculation reports that the statutory minimum wages equals the total number of worked hours during the wage period multiplied times the statutory minimum hourly wages rate. The ‘hours worked’ are inclusive of any time the employee is in the workplace or is traveling in relation to their employment. Time that is unworked is not included and may include holidays, vacation days and paid sick days. In this specific calculation the wage period is one month. If the wages paid in the wage period are less than the statutory minimum wage the employee should be paid the difference. If the employer fails to pay the statutory minimum wages the employer becomes liable to be fined and imprisoned. The fine amount is stated at HK$350,000 and the term of imprisonment stated at 3 years. The employer is not allowed by law to contract out of the statutory required minimum wage and any contract provision…