Minimum wage Essays (1232 words) - Employment Compensation

The Hong Kong Federation of Trade Unions reported that around 310,000 low paid employees will get higher wages after setting the minimum wage. It is believed that the minimum wage will bring more wealth to low income families and narrow the wealth gap. As a result, the minimum wage was set at $28 per hour as the new wage ordinance on 1st May, 2011. This law applies to the market force, including the disabled. However, it is not applicable to live-in domestic workers, work-experience interns and student interns. Despite the above fact that minimum wage has bring some benefits to the employees, we believe that people fail to see the whole picture. The implementation of minimum wage in Hong Kong has posted a threat on different companies, including companies? suffering from heavy economic pressure, the reduction of welfare and the unfairness to the old employees. Firstly, the companies may suffer from heavy economic pressure due to the rise in operating costs and decline in their profits, which lead to the slowing down of their plans of expanding business and even result of being forced to close down. The minimum wage would certainly affect some business, such as the catering industry. Take KFC as an example, KFC is one of the companies struggling with the high costs after the implementation of minimum wage. Two years ago, KFC paid its staff only HK$16 per hour. Later, the wage rate of staff was increased more than 30%, which is HK$21 per hour. As the minimum wage is set to HK$28, the percentage increase in wage rate is 33.3%. Therefore, it is difficult for KFC to run its business because of its high costs. The increase in operating costs also happened in the property management companies. From an article of the Standard, the president of the Hong Kong Association of Property Management companies, Edmond Cheng Kam-wah said that it is expected that the minimum wage will cause the increase in operating costs of local property management companies by 3-4%. If the minimum wage is set at a level which some employers can?t afford, they may have to relocate their businesses to the mainland China. This will adversely affect the economy of Hong Kong. Thus, there is a need to strike a balance between employers and employees but not minimum wage. Moreover, many other companies have been facing the increase in costs after the minimum wage law is launched. A survey, conducted in June 2011 by the Hong Kong Institute of Human Resource Management, reported the cost adjustment in various companies. 117 companies from 17 different industries are questioned while 115 companies have responded to the interviews. Results have shown that 9% of the companies indicated more than 10% increase in overall staff costs, including salaries, bonuses, allowances and benefits, 21% of the companies indicated 2% - 9.9% increase in costs while 70% of the c ompanies indicated less than 2% increase in costs. It seems that minimum wage have posted a great impact on the various companies as staff costs have increased a lot under the minimum wage. Secondly, in order to counter the impact of minimum wage, employers may remove meal breaks and even reduce conventional welfare practices of the employees. This effect implies to different companies, such as those in the hotel industry. According to a survey done by the Catering and Hotels Industries Employees' General Union in June 2012, 246 room attendants from about 30 hotels responded to the interview. Results have shown that 70% of respondents fail to receive medical insurance while more than half of the respondents fail to receive paid annual leave. Besides, many people may think that gaining higher wage rate after the statutory minimum wage was set leads to an increase in income. This may also allow citizens to have higher living standards. However, a survey conducted by the Oxfam proves that minimum wage causes another consequence. The survey has shown that 19.6% of low-income workers reported a decline in their individual income while 27.4% of them reported a decline in fami ly income. This is caused by the fact that employers are reducing remuneration packages by cutting paid rest days and paid meal breaks. In order to cut the