scope 6 - hkep · employees of many industries think that their pay cannot keep up with inflation...

Scope 6 Macroeconomic Problems and Policies

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New Horizon Economics

Assignment: News commentary

— ‘Arelargechainretailersdeprivingtheiremployees’

Macroeconomic

Problems Policies

Scope 6：

New Horizon Economics School-based Assessment Resources Package (Compulsory)

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Assignment: News commentary

Are large chain retailers depriving their employees?

Employeesofmanyindustries thinkthat theirpaycannotkeepupwith inflation,andtheydemandforminimumwagelegislation.ChiefExecutiveDonaldTsangsaidthattheHongKongSARGovernmentwillintroducethebillonstatutoryminimumwageinthe2009legislativesession,aimingtohaveminimumwagelegislationwithintheyear.Thefollowingmindmapcanhelpyouthinkabouthowtochooseasuitabletopicfromourdailyliveson'minimumwagelegislation'.Completethemindmapbelow.

Minimum wage legislation

Effects Justifications

Derived problems

Factors to be considered

Step Setting a topic1Step Setting a topic1


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The following report is about real wages during inflation. Read carefully and answer the questions.

Employeesofchainretailerscannotsupporttheirlivingwithanaveragehourlywageof$22.72.

A01 Local News DAILY NEWS 6 July 2008

Employees of chain retailers cannot earn enough to support their livingPeople’s Alliance for a Minimum Wage (‘Alliance’) did a random survey on the part-time employees of 93 shops of 7 large chain retailers. The survey was aimed at calculating the average hourly wage of the samples. The findings show that the average hourly wage was only $22.72. It represented a mere rise of 7.3% compared with the wage survey findings released by Hong Kong Confederation of Trade Unions in October 1998.

The employees of one of the shops polled even earned wages lower than the level a decade ago. The Alliance considers the low pay a deprivation of the chain retailers’ employees since they cannot earn enough to support their living. Some of them even earn less than cleansing workers and security guards. The Alliance also considers that minimum wage legislation should be an across-the-board measure to protect low-income earners of all industries.

Average hourly wage of employees of large chain retailers

Retailer 7-11 OK CRC Park’NShop Wellcome Watsons Mannings Average*

1998 22.7 20.6 20.5 20.6 21.5 Notpolled Notpolled 21.182008 21.5 23 22 25 22.1 27 27 22.72

Change(%) -5.3% +11.7% +7.3% +21.3% +2.8% N/A N/A +7.3%

* Watsons and Mannings were not included. Source: People’s Alliance for a Minimum Wage

Fromthemindmaponthepreviouspageandthenewsreportabove,whatissuedoyouthinkisderivedfromthefailureofemployeesofchainretailerstoearnenoughtosupporttheirliving?Listtwoofthem.

1.

2.

Fromthedemandforminimumwage legislationbydifferentsectors insociety, studentscanexaminewhetheremployeesworkinginlargechainretailersarebeingexploited,andwriteanewscommentaryonthistopic.Now,usethetopic‘Arelargechainretailersdeprivingtheiremployees?’andwriteanewscommentary.Listthetools,economicconceptsandtheoriesinvolved.

Topic Tools, concepts and theories

Are large chain retailers depriving their employees? •

•

•


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Whatdoyouthinkshouldbeincludedwhencollectinginformationrelatedtotheabovetopic?Listtwoofthem.

1.

2.

Wheredoyouthinkyoucancollecttheabovedata?Listtwoofthem.

1.

2.

Howcanwedeterminewhetherlargechainretailersaredeprivingtheiremployees?Accordingtothedatacollected,giveapreliminaryanalysisbycompletingthefollowingmindmap:

How can we determine

whether large chain retailers are

depriving their employees?

Step Data collection and analysis2Step Data collection and analysis2Listthemaincontentsintheintroduction,analysisandconclusionofthenewscommentary.

Introduction

Analysis

Conclusion

Step Drafting an outline3Step Drafting an outline3

Basedonthedatacollectedintheabovesteps,writeanewscommentaryonthetopic.


I ntroduction

Step Writing a news commentary4Step Writing a news commentary4


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Listthemaincontentsintheintroduction,analysisandconclusionofthenewscommentary.

Introduction

Analysis

Conclusion


Basedonthedatacollectedintheabovesteps,writeanewscommentaryonthetopic.


I ntroduction



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A nalysis


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C onclusion

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School-based Assessment Guide


I. Background informationStudentsshouldbe familiarwith the followingknowledgeandconceptsbefore theystartworkingon thenewscommentary:

Knowledge required Concept required

• The difference between real wage and nominal wage (5A: Ch.2)

• The impact of inflation on real wage (5A: Ch.2)

• The impact of inflation on living expenses (5A: Ch.2)

• Inflation (5A: Ch.2)

• Real and nominal (5A: Ch.1-2)

II. Suggested teaching procedure

1.Teachersmaygothroughsomeimportanteconomicknowledgeandconceptswithstudentswhentheyaredoingstep1,suchasinflation,deflation,realwageandnominalwage.Then,askstudentstothinkabouttheimpactsofmacroeconomicproblemssuchasinflationanddeflation.Askstudentstosetatopicforthenewscommentaryafterreadingthenewsreportandbasedontheimpactofinflationaslistedinthemindmap.

3.Apreliminaryanalysisshouldbemadebasedonthemindmap.Thewagegrowthof largechainretailersshouldbecomparedwiththeconsumerpriceindicesandotherindustries,soastoconcludewhetherlargechainretailersaredeprivingtheiremployees.

4.Askstudentstoorganizethedatainstep3,concludethemainpoints,andlisttheminintroduction,analysisandconclusion.

2.Whenstudentsaredoingstep2,teachersmayremindthemtocollectdataonthewagegrowthofotherindustriesandtheconsumerpriceindexgrowthduringthesameperiod.IntroducetostudentsthewebsiteoftheHongKongInstituteofHumanResourcesManagement,wheretheycangetdataonthewagegrowthofallindustries.

5.Whendoingstep4,guide students touse theeconomicknowledgealongwith thepreliminaryanalysisinstep2.Theyshouldstatetheirpointsandimplicationssystematically,tellthesignificance,givecommentsandmakeinformedjudgements.

III. Suggested answer

Overtime work may worsen.



Derived problems


Protect workers’ income.

Non-skilled workers have fewer job opportunities. Some of them may be unemployed.

Youth unemployment rate may rise.

Flexibility of market decreases.

Employers may only hire workers with more experience or higher productivity.

Employers may cut staff, increasing the workload of current workers.

Prevent workers from exploitation.

The market cannot solve the problems of poverty and income inequality.

Many countries have statutory minimum wage.

How to set the minimum wage level.

Minimize the negative effects brought by minimum wage.

Cost and benefit of minimum wage legislation.

Issuesderivedfromthefailureoftheemployeesofchainretailerstoearnenoughtosupporttheirliving:

1. What is the impact of inflation on real wages?

2.Arelargechainretailersdeprivingtheiremployees?


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III. Suggested answer

Overtime work may worsen.



Derived problems


Protect workers’ income.

Non-skilled workers have fewer job opportunities. Some of them may be unemployed.

Youth unemployment rate may rise.

Flexibility of market decreases.

Employers may only hire workers with more experience or higher productivity.

Employers may cut staff, increasing the workload of current workers.

Prevent workers from exploitation.

The market cannot solve the problems of poverty and income inequality.

Many countries have statutory minimum wage.

How to set the minimum wage level.

Minimize the negative effects brought by minimum wage.

Cost and benefit of minimum wage legislation.

Issuesderivedfromthefailureoftheemployeesofchainretailerstoearnenoughtosupporttheirliving:

1. What is the impact of inflation on real wages?

2.Arelargechainretailersdeprivingtheiremployees?


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Writeanewscommentaryon the topic‘Are largechainretailersdepriving theiremployees?’,and list the tools,economicconceptsandtheoriesinvolved.

Topic Tools, concepts and theories

Are large chain retailers depriving their employees? • Inflation

• Real wage and nominal wage

Whatdoyouthinkshouldbeincludedwhencollectingdatarelatedtotheabovetopic?Listtwoofthem.

1. Dataon thewagegrowthofother industries to theemployeesof largechain retailershavea lowerwage

growth–

Source1:InJanuary2008,theHongKongInstituteofHumanResourcesManagementdidasurveyonthepayrise

and bonus payment of 120 companies in 15 industries for the year. The findings were as follows:

Industrieswiththehighestpayrise:Banking(6%),Retailing(5.3%),Shipping/Containerhandling(4.5%)

Fixedamountofbonus:Fixedamountofbonusfor42companiespolled.Theaverageamountis1.01timesthe

monthlysalary.

Non-fixed amount of bonus: Non-fixed amount of bonus for 34 companies polled. The average amount is 1.42

timesthemonthlysalary.

Source2:Civilservicepaychangesinthesameperiod:Theentrysalaryofteachersofgovernmentschoolsand

government-aidedschools(MPSPoint17)istakenasanexample.

October 1998 June 2008 Rate of change

$22,075 $22,985 4.12%

2. Data on composite consumer price index to find out whether the real wages of the employees of large chain retailers

haverisen–Source3：Theincreaseincompositeconsumerpriceindicesof thesameperiod(1998to2007)

Year Year-on-year rate of change (%)

1998 +2.8

1999 -4.0

2000 -3.8

2001 -1.6

2002 -3.0

2003 -2.6

2004 -0.4

2005 +1.0

2006 +2.0

2007 +2.0

Step Data collection and analysis2Step Data collection and analysis2


1. Thewebsiteof theCivilServiceBureau,soas tounderstandthecivilservicepayrise in thepastdecade.The

websiteoftheHongKongInstituteofHumanResourcesManagement,soastounderstandthepayriseofother

industries.

2. ThewebsiteoftheCensusandStatisticsDepartment,soastocollectdataonthecompositeconsumerprice

indices.


Compared with the wage growth of other industries

Change in real wage




Higher than other industries?

Lower than other industries?

Change in nominal wage higher than change in CPI?

Change in nominal w a g e l o w e r t h a n change in CPI?

Listthemaincontentsintheintroduction,analysisandconclusionofthereport.

Introduction

Provide background information and point out that inflation is one of the macroeconomic problems. Employees of

many industries think that their pay cannot keep up with inflation. Employees of large chain retailers even consider


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1. Thewebsiteof theCivilServiceBureau,soas tounderstandthecivilservicepayrise in thepastdecade.The

websiteoftheHongKongInstituteofHumanResourcesManagement,soastounderstandthepayriseofother

industries.

2. ThewebsiteoftheCensusandStatisticsDepartment,soastocollectdataonthecompositeconsumerprice

indices.


Compared with the wage growth of other industries

Change in real wage




Higher than other industries?

Lower than other industries?

Change in nominal wage higher than change in CPI?

Change in nominal w a g e l o w e r t h a n change in CPI?

Listthemaincontentsintheintroduction,analysisandconclusionofthereport.

Introduction

Provide background information and point out that inflation is one of the macroeconomic problems. Employees of

many industries think that their pay cannot keep up with inflation. Employees of large chain retailers even consider


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themselvesbeingdeprivedof.Theydemandforminimumwageprotection.

Statethatthisnewscommentarymainlyexaminesiflargechainretailersaredeprivingtheiremployees.

Analysis

State that the main point of discussion is to find out whether the employees’ real wages have decreased.

Acomparisoncanbemadebetweentheemployees’wagesof largechainretailersandother industries,with the

consumerpriceindicesasreference.

List the data collected. State that Hong Kong has experienced deflation in the past decade, and the nominal wages of

allindustrieshavefallen.Besides,theconsumerpriceindexshowsanactualriseinthenominalwagesofemployees

oflargechainretailers.So,theyarenotbeingdeprivedof.

Conclusion

Restatethatrealwageisanimportantindicatorindeterminingwhetheremployeesarebeingdeprivedof.

State that the survey findings are not supportive for minimum wage legislation.


I ntroduction

In the scope of macroeconomic problems and policies, inflation is one of the

economicproblemswiththegreatestimpact.Itmayleadtolowerrealwages.

People’sAllianceforaMinimumWage(‘Alliance’)recentlypointedoutthat

employeesoflargechainretailersarecurrentlyearninganaveragehourlywage

of$22.72,andtherewasonlyanaveragepayriseof7.3%inthepastdecade.

TheAlliancesuspectsthatlargechainretailersaredeprivingtheiremployees,

anditdemandsforminimumwageprotection.However,whatshouldbetaken

as thecriteria indeterminingthe impactof inflationonemployees’wages?

This news commentary will discuss this issue, and conclude whether

largechainretailersaredeprivingtheiremployees.


Sta te the area and m a i n p o i n t s o f discussion.

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A nalysis

Accordingtothereport,theAlliance’simplicationswereasfollows:

Minimumwagelegislation

Low-incomeworkersaredeprivedofandcannot

supporttheirlivingLowwagegrowth

Yet, when determining the impact of inflation on workers, a comparison with

thewagesofotherindustriesisnecessary.

Accordingtothereport,wagesoflargechainretailers’employeesonlyroseby

7.3%inthepastdecade.Thismeansanaverageannualincreaseoflessthan1%,

which seems very low. However, according to Source 3, there was deflation in

HongKongfrom1999to2004.Duringtheperiod,therewerewagecutsfor

manyindustries,andtheoverallnominalwageratealsofellasthepricelevel

fell.Thishelpstoexplainwhyemployeesoflargechainretailersonlyhada

7.3%payriseinthepastdecade.Besides,accordingtothenewsreportand

Source2, thewagegrowthof largechain retailers’employeeswas7.3%

from1998to2008,whichwasevenhigherthanthe4.12%wagegrowthofcivil

servants.AccordingtoSource1,thepayriseoftheretailbusinessin2008was

5.3%,whichwasonlysecondaryto thebankingindustry.Employeesof the

retailbusinessweregiventhesecondhighestpayrise.Theseshowthat the

pay rise of large chain retailers was high compared with both public

andprivatesectors.

Besidescomparingwithotherindustries,weshouldalsorefertothecomposite

consumer price indices of the same period to find out whether the

employees’realwageshave lowered.According toSource3,HongKong’s

averagecompositeconsumerpriceindexduringthepastdecadewas-0.76%,

but the largechain retailers’employeeshadawagegrowthof7.3%.This

was8.06%higher than theaveragecompositeconsumerprice index.This

meanstheyhaveahigheraveragelivingstandardthanadecadeago.

Compare the wages of large chain retailers’ employees with those i n t h e p r i v a t e a n d public sectors.

Sum up the repor t . State the employees’ i m p l i c a t i o n a n d in t roduce the main points of discussion.

C o m p a r e w i t h t h e composite consumer price indices. State that the real wage is critical in determining whether the employees a re being deprived of.

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Inconclusion,thewagesoflargechainretailers’employeesonlychangedasthe

overalleconomychanged.Thereisnosupportivedatatoconcludethatthelarge

chainretailersaredeprivingtheiremployees.

C onclusion

Whenanalyzingthewagechangesofanindustry,weshouldconsiderthereal

wage,andcomparewith thefiguresofother industries.Thefindingsof the

Alliance’s survey are inadequate to imply that low-income employees of

largechainretailerscannotsupport their livingduetodeprivation.Thus, the

survey findings are not supportive for minimum wage legislation.

S t a t e t h a t t h e employees a re no t being deprived of, so the survey f ind ings a re no t suppor t i ve fo r min imum wage legislation.

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IV. School-based Assessment Form

News commentaryTopic: Are large chain retailers depriving their employees?School’sname:

Student’sname: Class:

Date:

Assessthestudent’sperformancebasedonthefollowingcriteriaandgivecomments.

Assessment dimensions

Criteria Marks Comments

5 4 3 2 1 0

Introduction

Able to state the area and mainpointsfordiscussion

Suitablelengthandabletostimulatereaders’interest

Analysis

Integrate news reports and makeanalysis

Able to use relevant economictheoriesandmodelsforanalysis

Abletomakeobjectiveanalysisandreasonabledeductions

Clear arguments with proof andevidence

Correct use of grammar and nowrongspelling

Abletoleadreaderstodevelopdeepreflections

Conclusion

Abletosummarizethewholeessayand respond to the initial question

Abletoshowone’sownopinion

Overallcomments: Totalmarks:

scope 6 - hkep · employees of many industries think that their pay cannot keep up with inflation...

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