The Employers' Federation of Hong Kong expressed its opposition to legislation for minimum wage during a meeting with the media yesterday.

The federation's chairman John Chan said the federation was not convinced that enacting a new law could resolve wage disparity.

He said the establishment of minimum wage runs against market principles, and he did not believe such a move could narrow the gap between rich and poor.

If employers are required by law to pay minimum wage to workers regardless of their productivity, he argued, employers will definitely hire more productive staff available in the market. In other words, less productive workers will be left jobless.

Although the government said only cleaners and security guards would be covered, he worried the law's coverage will expand to other sectors.

He also believed it would be very difficult to decide on an "appropriate" minimum wage.

Commenting on this year's civil service pay increase indicators, Chan said they are quite high compared to the 4.5-5 percent surveyed in the private sector.

The government earlier announced that the pay trend indicators for civil servants in the lower, middle and upper bands are 3.9, 5.29 and 6.3 percent respectively.

But Chan, who was the secretary for education and manpower when he left the civil service in 1993, said the indicators for the middle and upper bands are too high.

Coupled with the annual increment, civil service pay is very much on the high side and that will yield a great deal of pressure on the private sector, he said.

He also criticized the annual pay increment for civil servants for bearing no direct relation to their performance. He added that annual increment did not exist back in 1964 when he joined the civil service.

He suggested the government bring in such modern management practices as variable pay and performance-based pay although he knew it is not easy to make changes.

The federation's vice chairman Brian Renwick added that pressure exerted on the private sector by the high civil service pay would affect Hong Kong's economic competitiveness in the long run.

And as the government's money comes from taxpayers, he reckoned it is nothing less than the private sector funding the civil service pay increase.

(HK Edition 06/03/2008 page1)