A “living wage” for Hong Kong?

Oxfam in Hong Kong has recently released its Hong Kong Living Wage Report, which argued for the introduction of a living wage set at HK$54.7 (US$7) per hour. The agency is calling on employers to pay this living wage arguing that the current minimum wage has not been able to keep up with inflation and does not take the basic needs of employees’ families into account.

The study found that the basic monthly household expenditure for one person in 2017 was HK$10,494 to HK$11,548 (US$1,342 to US1,477). For a three-person family it was HK$19,935 to HK$21,156 (US$2,550 to US$2,705).

The living wage was calculated assuming employees worked 26 days a month and eight hours a day and was based on the fact that an average three-person working household (one parent with a full-time job, one with a part-time job, and one child in primary/secondary school) has 1.74 full-time workers. Taking these into account and after their basic monthly expenses were converted into an hourly rate, the estimated net living wage was HK$54.7.

Oxfam points out that the demand for a Hong Kong living wage is part of a broader worldwide campaign where many countries (including the UK, New Zealand, Canada and US) have seen campaigns and initiatives to pay a living wage. In many places the call for a living wage has been met with positive responses both from governments and from employers who see this as part of their broader corporate responsibility.

The core difference between the statutory minimum wage and a living wage is that employers are required by law to pay the minimum wage to employees, while employers can choose whether or not to pay the living to employees. Different processes are used to determine the living wage level. The minimum wage is set by government, which considers labour market conditions and economic growth over to the needs of low-paid workers and their families. In contrast, the living wage is estimated based on research on the cost of living; the standard is normative-based and socially defined, and the needs of low-income workers and their families are the main focus of consideration. It emphasizes work-life balance through advocating for a wage rate that enables workers to earn an adequate income without working excessive hours.

Oxfam argues that as the largest employer in Hong Kong, the government – which employs the largest number of outsourced low-income workers – should take the lead in paying a living wage. But it argues that most employers should be able to pay their employees (including all directly employed, contract and outsourced staff) a living wage. Doing this, they argue, would allow the most vulnerable to enjoy equal opportunities for development, and create a fairer society.

Oxfam Press Release (English): https://www.oxfam.org.hk/en/news_5624.aspx
Full report (English): https://www.oxfam.org.hk/content/98/content_40285en.pdf