Chairman's Message
Chairman's Message - Balance Employment Rights with Economic Development

Dr Charles YEUNG (Chairman of the 48th, 49th terms of office) May 2016


The labour policies should take into account business operations and sustainable overall economic development while protecting the legitimate rights and interests of employees.


Earlier, the Standard Working Hours Committee (SWHC) launched the Second-stage Consultation on the working hours policy directions, while the Minimum Wage Commission (MWC) commenced a review of the Statutory Minimum Wage (SMW) rate. In our view, the related issues have a broad impact on the labour market, business operations, employment relations and overall business environment. Hence, when discussing the wage and working hours policies, all sectors of the society must take into account human resource needs, businesses’ affordability and long-term economic development on the basis of objective data analysis in order to determine the labour policies that are in line with Hong Kong’s actual situation. In addition, employers and employees should be given greater flexibility and space for negotiation.


In favour of written employment contracts

The SWHC proposed a legislative approach to mandatorily require written employment contracts between employers and employees to specify clearly such terms as overtime work arrangements, wages, meals and rest periods. According to the findings of a survey completed by the SWHC in 2014, most employers and employees agreed that the working hours policy directions should be mutually agreed. In addition, nearly 94% of employees agreed to specifying the number of working hours, overtime arrangements and compensation methods through the employment contract.


Clearly, both employees and employers generally supported the use of written employment contracts to deal with the issue of working hours. We believe that this will help both parties specify clearly the related terms and enforce them effectively. This can improve not only employee rights and protection, but also give both parties space to negotiate the working hours, wages and labour welfare, thereby helping to further increase business efficiency, improve employment relations and consolidate overall economic competitiveness.


Focusing on grassroots employees who are really in need

The business community has always stressed that there are some difficulties in calculating the actual working hours as Hong Kong’s service-oriented economy involves numerous industries and trades; different industries have their own unique business models. Applying a one-size-fits-all model of working hours regulation will only give rise to many unfair and unreasonable situations, posing a serious impact on individual industries and even the society and economy as a whole.


We recognize that at present some grassroots employees who earn lower income and have to work unpaid overtime need help. The formulation of written employment contracts will precisely provide them with appropriate protection, while avoiding the impact on the flexibility of the labour market due to the introduction of too many regulations for the working hours policy. All sectors of the society must initiate more comprehensive and thorough discussions on how to more effectively provide concrete assistance and support for the grassroots employees concerned. This, however, has to be done on the premise that full consideration be given to the actual operations and needs of different industries in order to reduce the impact on the supply and demand of manpower and the labour market structure.


Paying close attention to the impact of increased labour costs

The minimum wage is also a labour issue of considerable concern to the business community. Since its implementation in 2011, the minimum wage has brought great pressure on business expenses. According to the Census and Statistics Department, in 2014 the remuneration for employees working in low-wage industries such as retailing, catering, property management, security, cleaning and elderly care accounted for nearly 40% of total business expenses, and this percentage was as high as 44.2% for SMEs. Faced with dramatic changes in the external economy, the local tourism and retail markets have continued to slow down. With the operating environment filled with challenges, a higher minimum wage, coupled with the pressures from standard working hours and the abolition of the Mandatory Provident Fund’s offsetting mechanism, will cause businesses to bear heavier operational burdens. In the long run, this will also be detrimental to the sustainable development of the job market as well as the overall economy.


Earlier, Guangdong government has frozen the minimum wage standard for the next two years in order to reduce the burden of expenditure for enterprises in the province. Besides, the US states of California and New York passed new laws in last month to substantially raise the local minimum wage to US$15 per hour, triggering strong opposition from many local employers. Some think tanks estimated that the rise will lead to more than one million job losses for the two states. The negative effect therefore warrants further consideration. We hope the relevant authorities in Hong Kong, when carrying out reviews, will carefully consider the extent of minimum wage increase to minimise the impact on the economy and business environment. In the long run, they should fundamentally resolve the issues of manpower shortage and long working hours through human resource development.


In summary, the labour policies should take into account business operations and sustainable overall economic development while protecting the legitimate rights and interests of employees. We look forward to employers and employees jointly exploring labour policy directions that are in line with Hong Kong’s social interests with a positive and pragmatic attitude. The Chamber will promptly collect member companies’ views on the minimum wage and working hours policies and make submissions to the relevant authorities in a timely manner.