Minimum wage effect minimal on SMEs: Survey
Updated: 2012-08-11 06:47
By Ming Yeung (HK Edition)
Small and medium enterprises (SMEs) say they are unharmed by the mandatory minimum wage which came into effect last year, and have suffered no detrimental effects, according to a survey conducted by the People's Alliance for Minimum Wage.
The alliance surveyed 194 retailers over a two month span. Half of the retailers belong to The Link, which oversees the city's major shopping malls under the Housing Authority. About 40 percent of the retailers who took part in the survey had one to three employees. Half were one-man shops.
Over 80 percent noted that the wage increase was contained at under 10 percent after the Minimum Wage Ordinance took effect in May, 2011.
The unemployment rate, remained stable in seeming defiance of expectations of many. Ninety percent of employers said they made no staff reductions as a result of the new ordinance.
Recent labor statistics also reveal that the number of vacancies in the job market has held steady, on par with vacancies prior to the promulgation of the Minimum Wage Ordinance. Poon Man-hon, the alliance's policy researcher, slammed agitators who tried to make the minimum wage a scapegoat for all sorts of imagined ill effects for small businesses. "We see that the woes of SME's come from exorbitant rents, not the minimum wage." Poon said.
Nearly three quarters of respondents said the rents they pay on their premises account for 30 to 60 percent of costs, and roughly one in 10, complained that rents comprise 60-70 percent of their operating costs.
Ricky Lau Shing-wai, who operates two hairdressing salons in Tsim Sha Tsui, noted that operating costs have increased 5 to 10 percent for junior staff because of the minimum wage, but rents have shot up so rapidly that he had to close down one of three shops he was operating.
"The landlord requested a 50 percent increase in rent from HK$120,000 to HK$180,000 a month. The wage rise never went that far," Lau said.
To curb the rent spike, a policy research officer of the Hong Kong Catholic Commission For Labour Affairs, Law Pui-shan, called on the government to re-establish rent control, which was abolished in 1998.
The President of the Hong Kong General Chamber of Small and Medium Business David Ting Tit-cheung agreed that rents are the biggest headache for SME employers, but he dismissed the survey as inconclusive, noting that it does not reflect the picture of the businesses most seriously affected, such as small catering companies.
While the effect of the wage increase was undoubtedly mild, he acknowledged, Minimum Wage Ordinance proponents overlook the unintended consequences of the law.
"The catering industry constantly encounters difficulty hiring dish washing staff, some don't even get any response to their postings, even though they pay up to HK$40 per hour," said Ting. Added to that, he said, the market adjusted automatically to pay more than the minimum to retain staff.
The People's Alliance for Minimum Wage argued that the initial minimum wage level - HK$28 per hour - does not go far enough to improve the lot of low paid workers in Hong Kong. Law Pui-shan proposed the rate be set at HK$35 an hour.
"When people earn at least HK$35 (an hour), not only can they improve their living standards but also can save up money for future expenditures and emergencies," she remarked.
(HK Edition 08/11/2012 page1)