Date
23 August 2017
People who have little chance of big career advancement may feel it might be better to focus on staying eligible for overtime pay and public housing rather than securing small pay rises. Photo: HK Govt
People who have little chance of big career advancement may feel it might be better to focus on staying eligible for overtime pay and public housing rather than securing small pay rises. Photo: HK Govt

Why 11,000 is a magic number

Hong Kong’s Executive Council on Tuesday passed a proposal to make it mandatory for employers to pay workers overtime wages at rates no less than their regular salaries, but the rule applies only to those making HK$11,000 (US$1,410) or less a month.

The plan requires bosses to state required working hours and compensation in contracts, and pay overtime wages based on the workers’ regular salary.

For example, if one employee is paid HK$11,000 per month and he works nine hours per day with a hourly wage of HK$50, three hours of overtime work will entitle him to HK$150 of compensation.

The HK$11,000 salary threshold set by the Standard Working Hours Committee has balanced the interests of both employers and workers.

The committee intends to guarantee overtime pay for low-paid workers, while avoiding massive extra costs for employers.

Currently, around 550,000 workers in Hong Kong are paid less than HK$11,000 per month, out of the city’s total workforce of 3.8 million. That is to say over 80 percent of the city’s employees will not benefit from the new scheme, which is estimated to cost employers HK$524 million a year.

Meanwhile, for singles, they are eligible for pubic rental housing only if they make no more than HK$11,250 per month. (The income limit for a three-person family is set at HK$22,390).

In that sense, 11,000 could be an interesting threshold.

Those earning up to HK$11,000 are eligible for both public housing and overtime compensation.

While those making a lot more will be fine, those earning just marginally more than 11K will lose out.

Given this, it won’t be surprising if low-paid workers begin resisting pay rises that will just put them above the HK$11,000 threshold.

Giving up the right to claim overtime and the eligibility for public housing for marginal pay rise may not make a lot of economic sense.

This article appeared in the Hong Kong Economic Journal on June 15

Translation by Julie Zhu

[Chinese version 中文版]

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RC

Hong Kong Economic Journal columnist

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