Potential advantages of the minimum wage law in Hong Kong Implementation of a reasonable amount of minimum wage is necessary for the current situation in Hong Kong. Minimum wage law prohibits workers or employees hired for less than a given hourly, daily or monthly minimum wage (Filion, 2009). Hong Kong is facing a difficulty of wealth gap. Although Hong Kong has a great reputation of the financial hub and one of the most affluent cities, its wealth gap is the worst in Asia (Lau, 2009).
There are thousands of people living in cage homes (Leung & Long, 2010). Moreover, in 2008, the city’s cage homes had risen, and one third of their average monthly income of cage home dwellers had gone on rent (Lau, 2009). Their bosses will try to pay fewer wages unless certain minimum wage exists. The law minimum wage should be introduced in Hong Kong as it will enhance the living standard of the poor citizens, bring in benefits for many industries, and will not lead to unemployment. Implementation of the minimum wage will enhance the standard of living for the poorest.
In 1996 and 1997, a study conducted in United States found that minimum wage increased the average minimum wage worker which brings 54 percent more of his or her family’s weekly income (Filion, 2009). In 2006, the poor citizens can only earn below $5. 50 per hour, however, in 2008, after the minimum wage increased, their wage raised to above $6 per hour (Filion, 2009). Growth of income motivates and encourages low-income people to work harder, instead of pursuing money through illegal means. It also stimulates their purchasing power.
In Chicago, USA, a study found that as minimum wage was raised, poor citizens’ spending went up (Filion, 2009). In Hong Kong, there are thousands of people living in cage homes, and over the year of 2009, the city’s cage homes had risen by around 20 percent (Leung & Long, 2010). The average monthly income of cage home dwellers was about HK$3,200, one third of which went on rent and remained around HK$2000 only. It is even not enough to afford their families’ basic meals (Lau, 2009). If the minimum wage law is implemented effectively as U. S. , poor citizens’ income would rise to about HK$4800.
As a result, after they pay the rent, around HK$3600 would remain. Although that amount is still not enough to afford a family’s basic meal, this will reduce the wealth gap and enhance social stability of Hong Kong. Many industries in Hong Kong will get benefits from the law minimum wage. Once the minimum wage is implemented, the number of cage house dwellers and homeless people will be reduced significantly; thus the cost of social welfare will be decreased. Hence, the government can invest more money on other industries, such as education and tourism.
Hong Kong, a small island without natural resources, manpower and the advantage of the location are the essentials for the Hong Kong economy. Building public libraries or offering scholarships for outstanding yet financially limited students to attain higher education will strengthen Hong Kong’s manpower. Moreover, if government puts effort on tourism, such as renewing old structures in the downtown and the hygiene of the street, this not only attracts more tourism but also creates jobs, such as street cleaners.
As a result, numerous foreigners may come to Hong Kong to study, work and travel; much foreign currency would come into Hong Kong, market will be activated. Consequently this will enhance the Hong Kong economy. Implementation of minimum wage will not lead to unemployment. Some studies argue that, minimum wage will hurt small businesses and increase unemployment, because once the law is implemented, in order to adjust the cost, managers may try to reduce the number of employees, and increase the amount of their work (Garthwaite, 2003).
However, in 1998, In United States, Economic Policy Institute (EPI) study found that there is no systematic, significant growth of unemployment associated with the minimum wage increase. It is because increase in wage will increase productivity and worker morale, and also decreases absenteeism, thus the average hourly wages and family income will increase, and the unemployment and poverty rates and will decreases (Filion, 2009). The minimum wage law has potential advantages, such as increase poor citizens’ income to enhance their living standard and this will reduce the ost of welfare, so the Hong Kong government can invest more on many industries to bring in benefits for them. Moreover, through increasing poor citizens’ wage, this may motivate workers and increase their productivity, thus the law will not lead to unemployment. Nowadays more and more citizens are getting poorer, thus Hong Kong should implement the minimum wage law as the advantages of the minimum wage law bring benefits for not only Hong Kong people but also industries. (782 words)
References: Filion, K. 2009, July 21). Minimum Wage Issue Guide. Economic Policy Institute. Retrieved October 7, 2010 from http://www. epi. org/publications/entry/issue_guide_on_minimum_wage/ Garthwaite, C. (2003, December 26). High minimum wage = high unemployment. Seattlepi. Retrieved November 13, 2010 from http://www. seattlepi. com/opinion/153901_unemploy26. html Lau, J. (2009, December 17). Hong Kong’s cage homes capture city’s stark inequality. Financial Times. Retrieved October 7, 2010 from http://proquest. umi. om/pqdweb? index=2&did=1923274791&SrchMode=2&sid=3&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1286692748&clientId=17557 Leung, C. , & Long, Y. (2010, September 7). Elderly should not have to endure cage-home conditions. South China Moring Post. Retrieved October 7, 2010 from http://proquest. umi. com/pqdweb? index=0&did=2131388481&SrchMode=2&sid=3&Fmt=3&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1286692748&clientId=17557