The intent of the Statutory Minimum Wage (SMW) is to “provide statutory protection for the wages of grassroots employees”, says a former chairperson of the Minimum Wage Commission. Since the SMW came into effect in May 2011, it has been uprated three times, from the initial HK$28 per hour to HK$30 per hour in May 2013, then HK$32.5 per hour in May 2015 and finally to HK$34.5 per hour in May 2017.
Are grassroots workers better off now, after the series of SMW uprates, than before? How well have workers’ wages been protected over the years?
The three SMW uprates between 2011 and 2017 represent a total increase of 23.2 percent. Meanwhile, price inflation as measured by changes in the Consumer Price Index, the index that reflects the impact of price changes on relatively low-income households, rose by 23.1 percent over the same period.
This means that the SMW uprates have so far barely kept pace with price inflation. In other words, for grassroots workers, there has been no real growth in earnings despite the three SMW uprates. In real terms, workers earning the SMW earned the same wage in 2017 as they did in 2011.
Figures on grassroots workers’ subsistence needs may help illustrate the well-being impacts of the SMW uprates and price inflation from the worker perspective.
In 2011, according to local studies, the breadwinner of a three-person household had to earn about US$34 per hour to sustain their family’s survival. The amount required increased to HK$42 per hour in 2017. A breadwinner who was a minimum wage worker, only earning HK$28 an hour in 2011 and HK$34.5 an hour in 2017, would respectively be HK$6 and HK$7.5 short of making ends meet during the time.
From the perspective of minimum wage earners, therefore, despite several pay rises over the years, they have ironically found their wages increasingly inadequate to cover necessary expenses.
At the same time, figures on SMW coverage indicate that the proportion of workers earning the SMW dropped from 6.4 percent in 2011 to 0.9 percent in 2017. In other words, of the category of low-pay workers covered by the SMW in 2011, only 14 percent were left to “benefit” from SMW protection in 2017, 86 percent of workers in the lowest-pay category had actually moved beyond and were earning more than the SMW in 2017.
This, however, should not be understood as the fare of the lowest-paid workers having achieved significant improvement. Rather, it is an indication of the growing irrelevance of the SMW in providing meaningful protection for this category of workers.
As a matter of fact, despite their higher wage growth over the years, the wages of this category of workers who had moved beyond the SMW remained low; their hourly wages in 2017 ranged between HK$34.7 and HK$38.0.
Using the HK$42-per-hour subsistence wage rate as a benchmark, thus, for most of the workers who had managed to earn more than the SMW, they were nonetheless still not able to make ends meet in 2017, just as they were not able to in the preceding six years.
Indeed, figures on the distribution of wages show that the number of workers unable to make ends meet is high. In 2017, as many as 13 percent of workers earned less than the HK$42-per-hour subsistence wage of the time.
Figures on wage growths at different percentile points between 2011 and 2017 in the low-paying sectors help shed further light on the wage growth of lower-income workers relative to that of workers higher on the pay scale.
The list below compares the growth rate of SMW and the average growth rates of wages at the 10th, 25th and 50th percentile points between 2011 and 2017 in low-paying sectors.
-10th percentile point 33.5%
-25th percentile point 37.9%
-50th percentile point 40.5%
The figures in the list show that in the low-paying sectors, the wage growth of the higher-income groups (at the 25th and 50th percentile points) was in general higher than that of the lower-income groups (SMW earners and at the 10th percentile point).
While the list shows only the average growth rates, in fact, related figures of individual low-paying sectors indicate that in not a few low-paying sectors, the wage growth difference was a lot greater.
For example, in the cleaning services sector, the difference between the wage growth at the 10th percentile point and that at the 50th percentile point was as high as 23.5 percentage points (23.2 percent vs 46.7 percent).
Other sectors with great wage growth differences between the 10th percentile point and the 50th percentile point worthy of attention include:
Security services sector: 17.9 percentage points (28.2% vs 46.1%)
Supermarkets and convenience stores: 15.0 percentage points (29.6% vs 44.6%)
Laundry and dry cleaning services: 11.6 percentage points (31.8% vs 43.4%)
Elderly homes: 9.4 percentage points (32.1% vs 41.5%)
Local courier services: 8.2 percentage points (31.2% vs 39.4%)
All these figures suggest that from the perspective of grassroots workers, since the inception of the SMW in 2011, the less they have earned, the more miserly pay rise they have got, and because of this, they have been making less and less money relative to their colleagues higher on the pay scale.
These figures speak volumes about whether or not grassroots workers have become better off and whether or not their wages have been better protected now than before. Further elaboration will appear superfluous.
Admittedly, the Minimum Wage Commission can take the view that figures do not necessarily speak for themselves and are subject to interpretation; it may further take the view that grassroots workers have in fact not fared so badly under the protection of the SMW as the figures appear to suggest.
If the Commission does hold such views, as a statutory body established by the Minimum Wage Ordinance to protect the wages of grassroots workers, then it owes the public an explanation as to how, given the figures presented in this article, its views are warranted.
If, however, the Commission accepts the figures presented above as a fair depiction of the increasing misery of grassroots workers, then it owes the public an explanation as to why it has not exercised its statutory wage-setting powers to prevent such growing misery over the years.
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