If employees are entitled to overtime pay, how should we set the standard working hours in order to strike a balance between the interests of employers and workers?
Standard Working Hours Committee chairman Edward Leong cites a consultation paper which shows most employers and employees want their contracts to state the number of working hours and clearly define overtime.
A government consultant has come up with different scenarios to assess the impact of the scheme on businesses in different industries based on varying salaries and overtime rates.
Assuming employees who earn an average of HK$10,000 (US$1,290) a month work 52 hours a week under the standard working hours scheme and receive the same hourly rate for working overtime, employers across Hong Kong will pay an extra HK$103 million in salaries.
But if employees earn an average of HK$15,000 a month, work only 44 hours a week and get 150 per cent the usual hourly rate for overtime work, they will bring the extra cost to more than HK$10 billion a year.
The study shows that once standard working hours are enforced, as many as 35 per cent of small and medium-sized enterprises (SMEs) may face increased costs.
Some of them might incur heavy losses, with the retail, catering, property management sectors and the security services industry the hardest hit.
Stanley Lau, a representative of the business sector on the committee, said that the extra costs are astounding, adding it is difficult to calculate their implications for employers and the business environment.
He is worried that standard working hours might undermine the competitiveness and growth prospects of SMEs.
Leung Chau-ting, who represents labor unions on the committee, said the study is incomplete because it does not take into account the fact that companies may transfer some of their extra salary costs to customers.
He said the overall impact of scheme on the business sector may not be as profound as some predict since the extra salary costs will be shared among different industries.
Edward Leong said although employees might see increased income once standard working hours are implemented, employers might respond by slashing salaries or cutting jobs to offset the added costs.
This article appeared in the Hong Kong Economic Journal on Aug 27.
Translation by Alan Lee
[Chinese version 中文版]
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