For nearly 13 years since the implementation of the statutory minimum wage, the hourly rate was raised to $40 last May. However, criticisms have persisted in the community regarding the infrequency of the “two-year review.” The Hong Kong government is set to announce the future direction of reviewing the minimum wage level in the short term. Reports from media outlets on the 29th cited sources indicating that the minimum wage would be reviewed annually, and an “add but not subtract” formula would be introduced. According to the formula calculation, the minimum wage this time will increase by $1.8 to $41.8.
The “add but not subtract” formula consists of two parts, including the Class A Consumer Price Index and the Gross Domestic Product (GDP) figures. The specific calculation involves taking the change in GDP from the previous year, subtracting the average change in GDP over the past 10 years, multiplying the resulting value by 0.2. If the value exceeds 1, it will be capped, and then adding the change in Class A Consumer Price Index from the previous year. Even if the calculation results in a negative value, it will not reduce the minimum wage; it will automatically be zeroed out and frozen at the original level.
It is noted that Calculating the Class A Consumer Price Index aims to reflect the level of inflation, while incorporating the GDP into the calculation is in response to the long-standing demands of the labor sector to share in the economic achievements. As for whether the results derived from the formula will equal the adjustment magnitude of the minimum wage, it is understood that the formula is to enable the Minimum Wage Commission to focus more effectively on discussions in line with the “annual review” and that the final adjustment still needs to be approved by the Executive Council.
May 1st is International Labor Day, with labor groups advocating for an increase in the minimum wage from the current $40 to $55. However, Executive Council member and Legislative Councilor for the catering sector, Cheung Yu-yan, expressed opposition, stating that raising the minimum wage would weaken Hong Kong’s competitiveness and should not be implemented further.