1 i mpacts of m inimum wage o rdinance on s ervice industry speaker: ms. catherine s h yan convener,...
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IIMPACTS OFMPACTS OF
MMINIMUM WAGE INIMUM WAGE
OORDINANCE ON RDINANCE ON
SSERVICE INDUSTRYERVICE INDUSTRYSpeaker: Speaker: Ms. Catherine S H YanMs. Catherine S H YanConvener, Environmental Services Alliance (Hong Kong)Convener, Environmental Services Alliance (Hong Kong)
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
The Development of Statutory Minimum Wage (“SMW”)The Development of Statutory Minimum Wage (“SMW”)
Introduction of Wage Protection Movement in 2007
Minimum Wage Provisional Commission was formed in 2009
Minimum Wage Bill was passed on 15 July 2010
Recommended minimum wage level at $28 per hour on
10 November 2010
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
The Development of Statutory Minimum Wage (“SMW”)The Development of Statutory Minimum Wage (“SMW”)
The recommended wage level was accepted by Legco on
5 January 2011
Implementation of SMW on 1 May 2011
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
Impacts of SMW on the Industry and the Labour MarketImpacts of SMW on the Industry and the Labour Market
No cut off date for reckonable year of service of employees
had created a substantial non-budgeted financial burdens
on employers
More administration work and costs involved
A ripple effect and chain reaction has emerged
e.g. wage for capable workers and upper ranking employees
need to be scaled up to justify responsibilities
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
Impacts of SMW on the Industry and the Labour MarketImpacts of SMW on the Industry and the Labour Market
Increased operational costs had affected the profitability of
business especially in labour intensive industries
Higher inflation due to costs has increased and transferred
across the board
SMW paid with additional benefits has enticed capable
workers in our industry to migrate to other industries
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
Impacts of SMW on the Industry and the Labour MarketImpacts of SMW on the Industry and the Labour Market
Labour shortages in the industry have worsened because of
unfavourable working condition in comparison with other
industries on the same wage bracket
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
Does the Implementation of SMW Really Serve its Legislative Does the Implementation of SMW Really Serve its Legislative Purpose?Purpose?
In theory, it does raise the wage level for those low paid
workers
In practice, it creates unexpected and irrational conflicts
between employers and employees due to the inconsistent
interpretation of the Ordinance by Government Officials.
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
Does the Implementation of SMW Really Serve its Legislative Does the Implementation of SMW Really Serve its Legislative Purpose?Purpose?
It is a concession to the labour-backed politicians which does
not fully serve its legislative purpose
It was legislated without making a good balance of interests
for all parties
e.g. no cut off date for years of service incurred non-
budgeted staff compensation cost to employers
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
How is SMW Calculated?How is SMW Calculated?
The Ordinance: Minimum wage = Total number of hours worked by
the employee in the wage period
x SMW rate (i.e. $28)
= 8 hrs x 26 days x $28
= $5,824
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
How is SMW Calculated? How is SMW Calculated? (con’t)(con’t)
Labour Unions’ Interpretation: Minimum wage = (Total number of hours worked by the
employee in the wage period
+ Rest day with pay + meal break with pay) x
SMW rate
= (8 working hrs + 1 hr meal break) x
(26 working days + 5 rest days) x $28
= $7,812 Difference: $7,812 - $5,824 = $1,988 (+34%)
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
How is SMW Calculated? How is SMW Calculated? (con’t)(con’t) The labour unions’ interpretation of the Ordinance, converts
the minimum wage from $28 to $37.55
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
How is SMW Calculated? How is SMW Calculated? (con’t)(con’t)
Current Pay Patterns Government : $6,944 (8 hrs x $28 x 31days)
Most SME : $5,824 (8hrs x $28 x 26 days)
Companies offer meal break with pay : $6,552 (9hrs x $28 x 26 days)
Companies offer rest days with pay : $6,720 (8hrs x $28 x 30 days)
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
How is SMW Calculated? How is SMW Calculated? (con’t)(con’t)
Companies offer rest days and meal break with pay : $7,560
(9hrs x $28 x 30 days)
Companies offer rest days with pay based on previous wages
at $5,000:
$5,000 - $667 rest day pay = $4,333 under Minimum Wage
To top-up the Minimum Wage, $5,824 - $4,333 = $1,491
i.e. $5,000 + $1,491
= $6,491
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
How is SMW Calculated? How is SMW Calculated? (con’t)(con’t)
Actual charge for SMW with no rest day and meal break pay
(including staff benefits, administration, other costs and profit)
Take home pay (100%) + staff benefits, insurance & MPF (49%) + operating & administration costs (8%) + materials & equipment cost (12%) + profit (5% on overall cost)
= ($28 + $13.72 + $2.24 + $3.36) x 105% = $49.69
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
How is SMW Calculated? How is SMW Calculated? (con’t)(con’t)
Actual charge for SMW with rest day and meal break pay
(including staff benefits, rest day pay, meal break pay, administration, other costs and profit)
Take home pay (100%) + staff benefits, insurance & MPF (49%) + rest day pay (16.67%) + meal break pay (12.5%) + operating & Administration costs (8%) +
materials & equipment cost (12%) + profit (5% on overall cost)
= ($28 + $13.72 + $4.67 + $3.50 + $2.24 + $3.36) x 105% = $58.26
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
How, in the long run, do we tackle the consequent problems aHow, in the long run, do we tackle the consequent problems and adopt the SMW?nd adopt the SMW?
Improve employment conditions like raising wage levels,
enhancing training for new comers and offering promotion
opportunities
Foster the social image of the industry and reinforce our
management modes to attract new blood to join the industry
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
How, in the long run, do we tackle the consequent problems aHow, in the long run, do we tackle the consequent problems and adopt the SMW?nd adopt the SMW?
To modernize, corporatize and turn electronic to cope with
changes in the industry
Make reasonable profit to enable us to carry on our business,
to balance the operating risks and to have sufficient resources
for service improvement
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
Do we need “Standard Working Hours” in the Future?Do we need “Standard Working Hours” in the Future?
Standard Working Hours is the next target of labour-backed
politicians
Standard Working Hours will worsen the labour shortage
problems in Hong Kong
Most industries facing labour shortages due to limited labour
resources and an aging problem with a lack of sufficient new
entrants to maintain numbers
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IMPACTS OF MINIMUM WAGE ORDINANCE IMPACTS OF MINIMUM WAGE ORDINANCE ON SERVICE INDUSTRYON SERVICE INDUSTRY
Do we need “Standard Working Hours” in the Future?Do we need “Standard Working Hours” in the Future?
Employees who want to earn more for a better living will be
restricted and earn less
We don’t need standard working hours at this stage
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QQ & & AA SSessionession
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