The issue of minimum wage is getting hotter every day now that it is next on the government's legislation agenda, after constitutional development in 2012. All these years the government has persistently resisted any interference in the labor market. The fact that the bill has managed to move this far is already a miracle - it is a milestone departure from the official free-market philosophy.

Resistance from the business sector has so far been conspicuously low, with the exception of the restaurant industry. Although the medium hourly wage of restaurant workers is only HK$32.7, it is still not the lowest in Hong Kong. The lowest goes to housing management, security and cleaning staff, whose medium hourly wages stand at HK$27.6. Workers can work 48 hours in one week, but this only returns a salary of about HK$5,500. They would be in a better position if they did not work and applied for welfare.

Some objections come with the rationale that if the minimum wage is set, many firms will either have to terminate workers, to reduce the costs, or cease business. Either case will shrink employment opportunities and cause workers to suffer the consequences.

Trade unions, however, do not believe this argument, which they find seems to come from the business sector. The former say first that because jobs in the restaurant, housing management, security and cleaning sectors cannot be moved outside of Hong Kong, the demand for workers to perform them is quite inelastic. Consequently, these unions reason that people and companies will pay more for the services, even if the government sets a basic minimum wage.

It is now clear, therefore, that there is a strong consensus that we need to set a mandatory minimum wage, and the only difference is how high it should be. The public debate, offers and counter-offers are just part of the usual bargaining process. We will soon see some deceptive behavior from both sides. Still, I predict that eventually the minimum hourly wage will fall somewhere between HK$20 and HK$33.

I do not want to speculate on the final exact figure. I just want to mention here that our society will have to confront the delicate question of how to distribute the GDP pie. Given the prevailing disparity in how gross income and social justice are distributed between the rich and the poor in Hong Kong, it is likely that a bill on the wage pendulum will swing in the direction of the disadvantage. I think this is really necessary to avoid future instability and an increase in truancy - both phenomena which work to deter development.

All law-abiding workers are entitled to share the fruit of development and to live a dignified life. This is a fundamental right, and it thus deserves crucial consideration in the discussion for a mandatory minimum wage.

The author is a member of the Commission for Strategic Development

(HK Edition 03/23/2010 page1)