Date
26 February 2020
Hong Kong’s Carrie Lam announced plans Tuesday to provide 5 more days of mandatory holidays for workers, a proposal that would meet with resistance from within the business community. Photo: Reuters
Hong Kong’s Carrie Lam announced plans Tuesday to provide 5 more days of mandatory holidays for workers, a proposal that would meet with resistance from within the business community. Photo: Reuters

Is HK govt making the right move over statutory holidays?

Hong Kong’s leader Carrie Lam Cheng Yuet-ngor announced on Tuesday new initiatives aimed at propping up the economy and improving people’s lives in the wake of the months-long social unrest. Unveiling a HK$10 billion relief package, Lam also said the government intends to increase the number of statutory holidays for workers in the city to 17 days from the current 12.

Surprisingly, authorities did not consult with employers and business leaders before announcing the proposal to enhance the holidays, though the move would effectively raise the costs for businesses.

Many businesses in the city, especially in sectors such as retail, catering and tourism, are trying to cut costs in the wake of the economic downturn caused by social disturbances and the US-China trade tensions. Against this backdrop, the plan for more statutory holidays for workers, businesses fear, mean additional impact on the bottom line.

Increasing the number of statutory holidays for the labor force is a significant trend in the developed world. But such measures are usually introduced when there is robust economic growth. It could backfire if it is being launched during an economic downturn.

During the economic turbulence between 1998 and 2003, and the downturn between 2007 and 2008, Hong Kong has seen local businesses adopt buffer measures such as reducing employees’ wages or shortening the business hours in order to cope with the challenges.

Back then, there was no statutory minimum wage or maximum working hours.

Now, the government’s new proposal for more compulsory holidays would mean reduced operational flexibility and increased financial burden for businesses. Small firms unable to balance their books, it is feared, could down their shutters or retrench staff, leading to a spike in the jobless rate.

The Lam administration wants to win public support by offering more welfare measures. The proposal for more statutory holidays would be welcomed by blue-collar workers, but it is a different matter when it comes to the perspective of the business owners.

Authorities should brace for resistance from within the business community.

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

Translation by Julie Zhu with additional reporting

[Chinese version 中文版]

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BN/RC

Hong Kong Economic Journal columnist