Hong Kong: For a minimum wage – at a level we can live upon!
Friday, 6 November 2009.
Only through workers’ united struggle and solidarity can basic rights be defended
chinaworker.info, Hong Kong
A minimum wage has been debated in Hong Kong for several years already, and there have been repeated struggles over this demand by grassroots layers. Next month the government of HKSAR will formally introduce its long-awaited law regarding the minimum wage and set its level. While there are ongoing debates regarding the level of the minimum wage, how it should be calculated, and whether or not migrant workers should be included, nevertheless, based on the current situation it is pretty certain that the minimum wage law will be passed. It is mass pressure, and growing support for a minimum wage from wide layers of the population, that has forced the government of Donald Tsang and the neo-liberal establishment – very reluctantly – to concede a minimum wage law. But in the absence of a real mobilisation by the trade unions especially, the new minimum wage will almost certainly fall far short of what is needed.
Hong Kong is often referred to as a “consumer paradise”, but today it has become a symbol of widening global economic inequality. Its economic disparity ranks the highest among all of the developed economies of the world. According to the latest report from the United Nations, the Gini Index (a measure of social inequality) for Hong Kong has reached 0.43,The income of the wealthiest ten percent of people is 17.8 times that of the poorest ten percent. According to the statistics collected by the Hong Kong Council of Social Services, taking 18,000 HKD/family/month as the median income, there are 1.24 million people in poverty in Hong Kong, meaning a poverty rate of 17.9 percent.
270,000 people have a monthly income lower than 5,000 HKD (US$645), and more than 40,000 young people are in long-term unemployment. One in four of all children (260,000) live below the poverty line, and lack sufficient educational resources and family security. The income of the vast majority of workers in the services industry is lower than 30 HKD per hour (US$3.90). Take fast food for instance, the hourly rate for workers is around 20 HKD (See chart below), and the average wage for workers in convenience stores has only increased by 1.54 HKD (20 US cents) per hour in the decade since 1998, in other words, a mere 15 HKD cents pay hourly increase per annum.
Hong Kong boasts the “highest degree of market freedom in world”. It has a myth of free market superstition around it that is created by big capital, powerful (unelected) political leaders, and elite intellectuals. They like to parrot the idea of the “invisible hand” as promoted by bourgeois economists, and about the “optimal efficiency at the balance of supply and demand”. Those political organisations that oppose the introduction of the minimum wage, such as the Liberal Party, go to the extent of using this to threaten the masses, saying that once a minimum wage is established or if the level it is too high, then it will lead to unemployment for hundreds of thousands of low-tech and no-tech workers. What they do not realise is that these fringe theories have already been overthrown by the real world, and even from the point of view of economic reformism, there are a large number of holes in the theories of free-market capitalism.
Even if we accept the laws of supply and demand of the entire consumer market as our basis, we must consider that the commercial costs include various elements, not only labour costs. Under the capitalist system, due to the need to acquire profit by capitalists, the proportion of labour costs relative to the entire cost of running the enterprise is rather small, and therefore changes in labour costs or wages cannot simply be translated into changes in the price of consumer goods. For instance, the retail price of one Apple Nano in the U.S. market is around US$199, but manufacturing price of Apple Nanos from Taiwanese company Foxconn’s factories in China that produce these units is only around US$15, and the workers on the production lines only earn 0.05 USD when they make one unit of Apple Nano. In addition, according to the investigations of SACOM (Students and Scholars Against Corporate Misbehaviour, Hong Kong) taking Disney plastic toys in Hong Kong made by factories in Shenzhen that sell for 50 HKD as an example, the labour cost of making such toys is only 1 HKD. Therefore in the actual production process, the proportion that labour cost occupy in relation to the total production cost is very small.
Even main food and retail industries in Hong Kong, the proportion taken by labour costs in relation to total production costs is around 15 percent, while the costs of commercial rents usually exceeds labour costs by 2-3 times, reaching as high as 70 percent of total overheads in some cases. More specifically the commercial rent prices in the Causeway Bay district of Hong Kong are the second highest in the world, only after its of Fifth Avenue in New York. If labour costs in Hong Kong are on average just 15% of total business outlays, which is the case, then even a wage increase of 10-20 percent only increases total costs by 1.5-3 percent. Clearly, this will have little direct influence on the price of consumer goods, let alone forcing enterprises to sack people en masse as the opponents of a minimum wage claim.
Also, the examples of Britain and the U.S. confirm this. After the minimum wage was introduced in Britain in 1999, the Low Pay Commission followed and observed various cases over a number of years, and there has never been a case of employees being fired as a result of the minimum wage. After the implementation of the Minimum Wage Law, there has not been any protests from employers’ associations either. According to a report from the U.S., in those states that have implemented a minimum wage, increases in average wage levels and employment rates exceed that of those states that did not have the minimum wage. In 2004 the state of Florida raised the minimum wage, and actually employment and the general state of the economy in this state rose.
There are many strong arguments for the minimum wage. The most important thing is to improve the living standards of the poorest and most vulnerable layers in society through the implementation of the minimum wage law, and thereby increase the average income of the entire society, and stimulate general consumption of society in general. The low-income layers of the population having more disposable income can also help to solve the problems of the lack of domestic demand and thereby improve the development of industries. When workers are paid more, they are also less likely to quit and go to another workplace, and therefore the costs of training and employment can be reduced. Higher pay for workers will improve their general morale and fighting spirit, and with more money and free time they will be able to improve their knowledge and political consciousness, as well as participating in political and social activities.
All of the workers in the world belong to the same family, and only through internationalism can the human rights and democratic power of the world working class be genuinely realised, so that all labouring masses can win the same benefits and welfare. If migrant workers are not included within the minimum wage provision it can only lead to a general decrease of wages, a negative influence on the income of native workers as well. “When the water levels are raised, the ship rises in height with it” – the 300,000 or so migrant workers in Hong Kong must be included within the overall framework of the minimum wage.
Main trade unions, like HKCTU and HKFTU, and pro-democratic parties argue that the minimum wage level should be kept at 33 HKD/hour, which translates into in a minimum monthly income of 6,800 HKD (based on a six-day working week: 6,885 HKD / 26 days / 8 hours = 33 HKD).This is roughly equivalent to social benefits for two unemployed adults in a family from Comprehensive Social Security Assistance Scheme (CSSAC), plus average monthly transportation charges and lunch fees for a worker within one month. The trade unions also calculate the total living costs (taking into account the effects of inflation) based on the study “A Research into Basic Living Necessities” published by the Hong Kong Council of Social Services in 2006, and a similar result is obtained.
chinaworker.info believes the hourly minimum wage should not be lower than 40 HKD, giving a monthly income of around 9,000 HKD, which is about half of the current median income level in Hong Kong. This is the living wage programme we support, to meet the basic living needs of the worker and his or her family. The minimum wage currently under deliberation by the government can barely provide for the basic survival of workers. Marxists believe that the price of labour is the basic minimum cost of keeping labourers alive in a respectable way and making it possible for them to reproduce the next generation of workers. What is considered to be “respectable” in the concrete sense is determined by cultural, political and economic factors in a society, and there is no “objective standard” that is “above” history and society.
Chinaworker.info supports the introduction of a statutory minimum wage in Hong Kong, but this legislation alone is insufficient for solving the basic problems of workers, and the only way to fundamentally change society is through various social movements and workers’ struggles that can unite the working class in solidarity and raise their consciousness.
As Lenin said, “Marxists recognise the struggle for reforms, i.e., for measures that improve the conditions of the working people without destroying the power of the ruling class…. The Marxists are working tirelessly, not missing a single ‘possibility’ of winning and using reforms, and not condemning, but supporting, painstakingly developing every step beyond reformism in propaganda, agitation, mass economic struggle, etc.”
Reforms within the framework of capitalism are not sufficient, as has been shown internationally by more than two decades of reverses and attacks on previous pro-worker reforms such as shorter working hours, job protection, pensions and free or subsidised healthcare. To make such reforms permanent requires the abolition of capitalism and the building of a socialist society based on mass democratic control over the economy.
chinaworker.info and socialists have long demanded a minimum wage, but we do not believe the new minimum wage law from this capitalist government will in itself eradicate low pay or super-exploitation. We believe that building a mass workers’ party and fighting trade unions is the only way to achieve real social change and organise a fight for democratic socialism with the solidarity of the working class internationally.
Fast Food Restaurant Workers’ Pay
Retail chain shopworker hourly pay
$ = Hong Kong dollars (US$1 = 7.8 HKD)
chinaworker.info, Hong Kong
A minimum wage has been debated in Hong Kong for several years already, and there have been repeated struggles over this demand by grassroots layers. Next month the government of HKSAR will formally introduce its long-awaited law regarding the minimum wage and set its level. While there are ongoing debates regarding the level of the minimum wage, how it should be calculated, and whether or not migrant workers should be included, nevertheless, based on the current situation it is pretty certain that the minimum wage law will be passed. It is mass pressure, and growing support for a minimum wage from wide layers of the population, that has forced the government of Donald Tsang and the neo-liberal establishment – very reluctantly – to concede a minimum wage law. But in the absence of a real mobilisation by the trade unions especially, the new minimum wage will almost certainly fall far short of what is needed.
Hong Kong is often referred to as a “consumer paradise”, but today it has become a symbol of widening global economic inequality. Its economic disparity ranks the highest among all of the developed economies of the world. According to the latest report from the United Nations, the Gini Index (a measure of social inequality) for Hong Kong has reached 0.43,The income of the wealthiest ten percent of people is 17.8 times that of the poorest ten percent. According to the statistics collected by the Hong Kong Council of Social Services, taking 18,000 HKD/family/month as the median income, there are 1.24 million people in poverty in Hong Kong, meaning a poverty rate of 17.9 percent.
270,000 people have a monthly income lower than 5,000 HKD (US$645), and more than 40,000 young people are in long-term unemployment. One in four of all children (260,000) live below the poverty line, and lack sufficient educational resources and family security. The income of the vast majority of workers in the services industry is lower than 30 HKD per hour (US$3.90). Take fast food for instance, the hourly rate for workers is around 20 HKD (See chart below), and the average wage for workers in convenience stores has only increased by 1.54 HKD (20 US cents) per hour in the decade since 1998, in other words, a mere 15 HKD cents pay hourly increase per annum.
Hong Kong boasts the “highest degree of market freedom in world”. It has a myth of free market superstition around it that is created by big capital, powerful (unelected) political leaders, and elite intellectuals. They like to parrot the idea of the “invisible hand” as promoted by bourgeois economists, and about the “optimal efficiency at the balance of supply and demand”. Those political organisations that oppose the introduction of the minimum wage, such as the Liberal Party, go to the extent of using this to threaten the masses, saying that once a minimum wage is established or if the level it is too high, then it will lead to unemployment for hundreds of thousands of low-tech and no-tech workers. What they do not realise is that these fringe theories have already been overthrown by the real world, and even from the point of view of economic reformism, there are a large number of holes in the theories of free-market capitalism.
Even if we accept the laws of supply and demand of the entire consumer market as our basis, we must consider that the commercial costs include various elements, not only labour costs. Under the capitalist system, due to the need to acquire profit by capitalists, the proportion of labour costs relative to the entire cost of running the enterprise is rather small, and therefore changes in labour costs or wages cannot simply be translated into changes in the price of consumer goods. For instance, the retail price of one Apple Nano in the U.S. market is around US$199, but manufacturing price of Apple Nanos from Taiwanese company Foxconn’s factories in China that produce these units is only around US$15, and the workers on the production lines only earn 0.05 USD when they make one unit of Apple Nano. In addition, according to the investigations of SACOM (Students and Scholars Against Corporate Misbehaviour, Hong Kong) taking Disney plastic toys in Hong Kong made by factories in Shenzhen that sell for 50 HKD as an example, the labour cost of making such toys is only 1 HKD. Therefore in the actual production process, the proportion that labour cost occupy in relation to the total production cost is very small.
Even main food and retail industries in Hong Kong, the proportion taken by labour costs in relation to total production costs is around 15 percent, while the costs of commercial rents usually exceeds labour costs by 2-3 times, reaching as high as 70 percent of total overheads in some cases. More specifically the commercial rent prices in the Causeway Bay district of Hong Kong are the second highest in the world, only after its of Fifth Avenue in New York. If labour costs in Hong Kong are on average just 15% of total business outlays, which is the case, then even a wage increase of 10-20 percent only increases total costs by 1.5-3 percent. Clearly, this will have little direct influence on the price of consumer goods, let alone forcing enterprises to sack people en masse as the opponents of a minimum wage claim.
Also, the examples of Britain and the U.S. confirm this. After the minimum wage was introduced in Britain in 1999, the Low Pay Commission followed and observed various cases over a number of years, and there has never been a case of employees being fired as a result of the minimum wage. After the implementation of the Minimum Wage Law, there has not been any protests from employers’ associations either. According to a report from the U.S., in those states that have implemented a minimum wage, increases in average wage levels and employment rates exceed that of those states that did not have the minimum wage. In 2004 the state of Florida raised the minimum wage, and actually employment and the general state of the economy in this state rose.
There are many strong arguments for the minimum wage. The most important thing is to improve the living standards of the poorest and most vulnerable layers in society through the implementation of the minimum wage law, and thereby increase the average income of the entire society, and stimulate general consumption of society in general. The low-income layers of the population having more disposable income can also help to solve the problems of the lack of domestic demand and thereby improve the development of industries. When workers are paid more, they are also less likely to quit and go to another workplace, and therefore the costs of training and employment can be reduced. Higher pay for workers will improve their general morale and fighting spirit, and with more money and free time they will be able to improve their knowledge and political consciousness, as well as participating in political and social activities.
All of the workers in the world belong to the same family, and only through internationalism can the human rights and democratic power of the world working class be genuinely realised, so that all labouring masses can win the same benefits and welfare. If migrant workers are not included within the minimum wage provision it can only lead to a general decrease of wages, a negative influence on the income of native workers as well. “When the water levels are raised, the ship rises in height with it” – the 300,000 or so migrant workers in Hong Kong must be included within the overall framework of the minimum wage.
Main trade unions, like HKCTU and HKFTU, and pro-democratic parties argue that the minimum wage level should be kept at 33 HKD/hour, which translates into in a minimum monthly income of 6,800 HKD (based on a six-day working week: 6,885 HKD / 26 days / 8 hours = 33 HKD).This is roughly equivalent to social benefits for two unemployed adults in a family from Comprehensive Social Security Assistance Scheme (CSSAC), plus average monthly transportation charges and lunch fees for a worker within one month. The trade unions also calculate the total living costs (taking into account the effects of inflation) based on the study “A Research into Basic Living Necessities” published by the Hong Kong Council of Social Services in 2006, and a similar result is obtained.
chinaworker.info believes the hourly minimum wage should not be lower than 40 HKD, giving a monthly income of around 9,000 HKD, which is about half of the current median income level in Hong Kong. This is the living wage programme we support, to meet the basic living needs of the worker and his or her family. The minimum wage currently under deliberation by the government can barely provide for the basic survival of workers. Marxists believe that the price of labour is the basic minimum cost of keeping labourers alive in a respectable way and making it possible for them to reproduce the next generation of workers. What is considered to be “respectable” in the concrete sense is determined by cultural, political and economic factors in a society, and there is no “objective standard” that is “above” history and society.
Chinaworker.info supports the introduction of a statutory minimum wage in Hong Kong, but this legislation alone is insufficient for solving the basic problems of workers, and the only way to fundamentally change society is through various social movements and workers’ struggles that can unite the working class in solidarity and raise their consciousness.
As Lenin said, “Marxists recognise the struggle for reforms, i.e., for measures that improve the conditions of the working people without destroying the power of the ruling class…. The Marxists are working tirelessly, not missing a single ‘possibility’ of winning and using reforms, and not condemning, but supporting, painstakingly developing every step beyond reformism in propaganda, agitation, mass economic struggle, etc.”
Reforms within the framework of capitalism are not sufficient, as has been shown internationally by more than two decades of reverses and attacks on previous pro-worker reforms such as shorter working hours, job protection, pensions and free or subsidised healthcare. To make such reforms permanent requires the abolition of capitalism and the building of a socialist society based on mass democratic control over the economy.
chinaworker.info and socialists have long demanded a minimum wage, but we do not believe the new minimum wage law from this capitalist government will in itself eradicate low pay or super-exploitation. We believe that building a mass workers’ party and fighting trade unions is the only way to achieve real social change and organise a fight for democratic socialism with the solidarity of the working class internationally.
Fast Food Restaurant Workers’ Pay
|
Restaurant |
2006 hourly rate |
2007 hourly rate |
2008 hourly rate |
|
KFC |
$15.7 |
$16.18 |
$18.94 |
|
McDonald’s |
$17 |
$18.43 |
$20.29 |
|
MX |
$18.9 |
$18.51 |
$21.11 |
|
Yoshinoya |
$19 |
$18.52 |
$20.64 |
|
Café de Coral |
$17.7 |
$19.4 |
$20.24 |
|
Pizza hut |
$19 |
$19.9 |
$23.71 |
Retail chain shopworker hourly pay
|
|
7-11 |
Circle K |
Vango |
Park n Shop |
Wellcome |
Watsons |
Mannings |
Average |
|
1998 |
$22.7 |
$20.6 |
$20.5 |
$20.6 |
$21.5 |
N/A |
N/A |
$21.18 |
|
2008 |
$21.5 |
$23 |
$22 |
$25 |
$22.1 |
$27 |
$27 |
$22.72 |
|
change |
-$1.2 |
+$2.4 |
+$1.5 |
+$4.4 |
+$0.6 |
-- |
-- |
+$1.54 |
$ = Hong Kong dollars (US$1 = 7.8 HKD)
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