Hong Kong Agrees to Minimum Wage as Top 40 Billionaires' Wealth Jumps 21%
Hong Kong lawmakers set the city’s first statutory minimum wage at HK$28 ($3.60) per hour as a report showed the wealth of the city’s top 40 billionaires jumped 21 percent.
The 40 richest people have $163 billion, up from $135 billion in 2010, after China’s growth bolstered their investments, according to Forbes Magazine. Legislators late yesterday ratified the government’s plan to increase salaries for about 314,600 workers by an average of 17 percent.
Chief Executive Donald Tsang’s government is introducing the minimum wage from May 1 to help reduce a widening wealth gap and resolve “social and economic conflicts” highlighted by Chinese Premier Wen Jiabao in December. Hong Kong has the biggest divide between rich and poor in Asia, according to a United Nations report.
“A minimum wage won’t change the income disparity in Hong Kong,” said Lee Cheuk-yan, a lawmaker representing the Hong Kong Confederation of Trade Unions. “Business owners are getting a big chunk of the profit while workers only get a small rise in their paycheck.”
Li Ka-shing, who controls Cheung Kong (Holdings) Ltd. and Hutchison Whampoa Ltd., retained the top spot on the list of the richest, with $24 billion, up from $21.3 billion in 2010. The family of Thomas Kwok and Raymond Kwok, vice-chairmen of Sun Hung Kai Properties Ltd., the world’s biggest developer by market value, came in second with $20 billion, up from $17 billion a year earlier, Forbes said in a press release today.
The Hang Seng Property Index, which tracks the performance of the city’s seven biggest developers, including Cheung Kong and Sun Hung Kai, gained 6.5 percent last year, outpacing the 5.3 percent increase in the benchmark Hang Seng Index.
Developers dominate Hong Kong’s list, with more than one- third of the top 40 making the bulk of their wealth from real estate, more than any other industry, Forbes said.
At the other end of the spectrum, some lawmakers are arguing that the minimum wage is not high enough.
“The minimum wage level is not enough for low-income groups to catch up with the inflation rate,” said Leung Yiu Chung, a legislator representing the Neighbourhood and Worker’s Service Centre. Still, it’s “at least better than nothing. I hope the government can review the wage level as soon as possible after the policy is implemented.”
Leung called for an hourly wage of HK$33.
Threat From Inflation
Hong Kong’s inflation accelerated to the fastest pace in three months in November, gaining 2.9 percent from a year earlier. Average wages in September fell 0.8 percent after accounting for consumer prices, the government said Dec. 28.
“We are closely monitoring the inflation trend, especially its impacts on the daily life of low-income groups,” John Tsang, the financial secretary, said in comments published on the government’s website yesterday. “We will introduce appropriate measures at the right time.”
Across Asia and the Pacific, some nations and cities have more generous minimum wages, some less so. Singapore doesn’t have one.
In Beijing, the minimum rose more than 20 percent to 1,160 yuan ($175) a month from Jan. 1, according to the Beijing Human Resources and Social Security Bureau.
In Tokyo, the level is 821 yen ($9.85) an hour, higher than Japan’s nationwide weighted average of 730 yen. New Zealand’s minimum is NZ$12.75 ($9.67) an hour. Thailand increased minimum wages to 221 baht ($7.30) a day in the island resort town of Phuket and 215 baht each day in the capital Bangkok on Jan. 1.
The number of people living in poverty in Hong Kong rose to a record 1.26 million, or about 18.1 percent of the population, in the first half of 2010, from 1.2 million last year, the Hong Kong Council of Social Service, an advisory body to the government, said in an Oct. 3 report.
Hong Kong’s minimum wage represents a departure for a city that has made free-market policies and low taxes the cornerstone of its economic policies. The government prides itself on being named the world’s freest economy for the past 16 years, based on the Index of Economic Freedom compiled by The Heritage Foundation, a U.S. think tank.
Russell Flannery, a senior editor at Forbes, said something that remained unchanged was the city’s role as an “important conduit” between foreign businesses and the fast-growing Chinese economy, benefiting those on the rich list.
Café de Coral
The introduction of a minimum wage may increase costs for employers including Dairy Farm International Holdings Ltd. and Cafe de Coral Holdings Ltd. Workers in the catering and retail industries are among the lowest paid in Hong Kong, with Dairy Farm’s 7-Eleven convenience store chain paying some employees as little as HK$20 an hour, according to an August survey by the People’s Alliance for Minimum Wage, a union-backed group.
Cafe de Coral, a fast-food chain, said in July that the adoption of the minimum wage will be one of the “challenges” for the company this year.
Businesses may raise prices, speed up automation and hire more part-time workers, Lucia Cheung, a senior manager at Cafe de Coral, wrote in an e-mailed reply to Bloomberg News today.
To contact the editor responsible for this story: Paul Panckhurst in Hong Kong at email@example.com