TRADE UNION STRATEGIES ON MINIMUM WAGE DETERMINATION AND SETTING IN HONG KONG 工會在最低工資制定上的策略 Jacky Tai, Poon Man Hoon and Chris Chan (A report commissioned by ILO, 2011)

最低工資實施前的狀況 Conditions before the implementation of Minimum Wage Economic Activiity Agriculture, fishing, mining and quarrying 0.1 Manufacturing Electricity, gas and water supply, and waste management Construction Services Import/export trade Wholesale and retail trades Accommodation and food services Transportation Information and communications Financing and insurance Real estate, professional and business services Public administration, social and personal services Ownership of premises 就業及經濟結構的改變 change of the economic and employment structure 製造業進一步萎縮及金融業越見重要 Decline of manufacturing and raise of financing and insurance Table 3.1: GDP by economic activity-- per cent contribution to GDP at basic prices

工資兩極化 polarization of wage distribution Industry and occupation Hourl y rate in 1999 Hourl y rate in 2010 per cent chan ge in real terms Chinese restaurant general worker 中式 酒樓一般工人 HK$29.0 HK$ per cent Chinese restaurant junior cook 中式酒樓 初步廚師 HK$34.9 HK$ per cent Fast food shop customer services worker 快餐店客戶服 務員 HK$28.5 HK$ per cent Fast food shop dishwasher/cleaner 快餐店收銀員 / 清潔員 HK$27.3 HK$ per cent Table 4.2:Wage comparison between 1999 and 2010 in food services sector

生產力與工資不成正比 labour productivity and wage are not in direct ratio

經濟好轉工人所得減少 workers get less when economy is good

大型企業基層員工薪酬調查 grassroot workers’ wage in large corporations 時薪數目百分比 30 元 % 30 元以上至 33 元以下 4227,6% 33 元至 35 元以下 % 35 元或以上 % 152 有薪飯 鐘 全港低薪 行業 無薪飯 鐘 全港低薪 行業 總計 有薪休息 日 49 (31.8%) 38.4%9 (5.8%) 18.6%58 無薪休息 日 43 (27.9%) 20.5%53 (34.4%) 22.5%96 總計

企業受訪 僱員 數目 平均時 薪 ( 元 ) 有薪 飯鐘 有薪休 息日 2013 年上半年盈利 ( 億 元 ) 商界展關 懷得主 肯德基 KFC 630.0XX ( 母公司 YUM) ( 全年 ) 港鐵 MTR 530.0XX62.56  麥當勞 McD 930.1XX ( 全球 )  領匯 The Link  ( 全年 )  中銀 BoC  X  吉野家  X 2.03( 母公司合興 ) ( 全年 )  新鴻基 SHK 330.8??  東亞 Bank of East Asia   渣打 SC  X68.99  華潤 731.1XX 24.78( 華潤創業 )  大家樂 Café de Carol  X6.46  大快活  1.39  惠康 Wellco me 831.3?X 2,121.95( 牛奶國際全年 )  美心 MX  ? 2,121.95( 牛奶國際全年 )  百佳 Park n SHop  ? ( 和記黃埔 )  理工大 學  -- 吉之島 433.7?? 3.55(AEON) ( 全年 )   X 2,121.95( 牛奶國際全年 ) 

最低工資與貧窮線 Minimum Wage and Poverty Line 香港整體供養比率 average dependency ratio: 1: 0.89 ( 工作人口 : 非工作人口 working : nonworking) 按貧窮線計算平均每名家庭成員的收入 average personal income in according with the poverty line: $3,839.5 每月最低月薪 minimum monthly wage: $3,839.5 X 1.89 = $7,256.7 最低時薪 minimum hourly rate: $7,256.7 / 26 days / 8 hours = $34.9 住戶人 數 入息中位數一 半 poverty line (2013 Q2) 在職住戶數 目 no. of working family 比例 ratio 人均入息 average personal income 加權 ratio % % % % % %

最低工資與基本生活需要 Minimum wage and Basic Living Standard 根據黃洪 2004 年基本生活需要調查計算 2013 年生活工 資水平 2013 living wage standard according to the calculation of Wong Hung in 年數據 Data in 2004 三人家庭 Household with three members 成人 2 名 2 adults 3,080X26,160 在學兒童 1 child 2,844X1 9, 年社會保障援助物價 指數 CSSA index 年社會保障援助物價 指數 假設到 2013 年中物價指數再 上升 2% Assuming in % rise 較 2004 上升 Accumlative increase from 2004 to % 三人家庭基本開支 9004X % 11,945 Basic living cost for a household of three 2011 年家庭住戶人 數 2.9 Average no. household members 2011 年每戶平均勞 動力 1.57 Average no. of working pop 以三人家庭為單位每戶平均勞 動力 1.62 Average no of working pop in a household with three members 在職人士每月最低 月薪 11945÷1.627,373 最低工資時薪 7373÷26÷835.4

Campaign for a MW legislation HKCTU has urged for the MW legislation since 1999 and the motions on legislation were negated by the Legislative Council in 1999, 2000, 2002, 2004, 2005 and First phase ( ), the target was to call for the MW for the security guards and cleaners who were employed by the government under contracts. Second phase ( ), HKCTU allied with various NGOs to fight for the legislation of MW Cardinal Joseph Zen Ze-Kiun, S.D.B. ( 陳日君 ) avowed in 2006 that the government has an ineluctable responsibility to set up the between 2006 and 2008, the media also played a role in unveiling the plights of the low income workers Eventually in 2008, the government decided to enact the law

Key regulations of the MW Ordinance The government: “aimed at striking an appropriate balance between forestalling excessively low wages and minimizing the loss of low-paid jobs while sustaining Hong Kong’s economic growth and competitiveness.” The trade unions: MW should be enough for the basic living standard. Owing to the legislative aim, many regulations in the ordinance are set to favour employers.

Coverage of the ordinance The MW applies to all employees, regardless of whether they are employed under a continuous contract. Exemptions: foreign domestic workers, student interns and work experience students are exempted in certain conditions, the contractors and the self- employed. Employees with disabilities are also covered by the MW Ordinance, but they can choose a productivity assessment

Definition of hours worked the ordinance: In attendance at the place of employment, irrespective of whether he is provided with work or training at that time; or Travelling in connection with his employment, excluding travelling between his place and residence and his place of employment, other than the place of employment that is outside Hong Kong. not clear, e.g. meal breaks and rest day conflicts between the low income workers and their employers were observed in the first few months of the implementation of the MW. HKCTU intervened promoting the solidarity of the workers, e.g. Café de Carol

Definition of “wages” and “wages payable to an employee in respect of wage period” The “wages” means all remunerations, earnings, allowances including attendance allowances, commission, overtime pay, tips. However, not all the wages are counted for the calculation of MW. Payment made to the employee for any time that is not hours worked (e.g. rest day pay and holiday pay) and advance or over-payment of wages should not be counted. As the same time, deductions from wages, for example, recovery of the loan to an employee or employee’s contributions to the pension, must be counted as part of the wages payable to an employee.

How to determine whether the wages meet the MW Two factors should be considered: 1) What is the MW: total number of hours worked X MW rate (i.e. HK$28) 2) What is the wages payable to the employee in respect of the wage period If 2) is not less than 1), then the MW requirement is met. Otherwise, if 2) is less than 1), the employer has to pay additional remuneration. many loopholes and deficiencies in the existing regulations more than 260,000 foreign domestic workers are excluded the government has left too much “white spaces” in the ordinance, like meal break and rest day pay travelling times between employee’s residence and the placement of work are not counted as working time.

Minimum Wage Commission (MWC) Section 11(2) of the MW Ordinance below: (2) The Commission consists of— (a) a person, who is not a public officer, appointed as the chairperson; (b) not more than 9 other members who are not public officers of whom— (i) not more than 3 must be persons who, in the opinion of the Chief Executive, have knowledge of, or experience in, matters relating to the labour sector; (ii) not more than 3 must be persons who, in the opinion of the Chief Executive, have knowledge of, or experience in, matters relating to the business sector; and (iii) not more than 3 must be persons who, in the opinion of the Chief Executive, have knowledge of, or experience in, a relevant academic field; and (c) not more than 3 other members who are public officers.

It imitates the British Low Pay Commission but has 3 more government officials in the MWC--> provides a stronger influence of the administrative on the decision making process. The members as well as the chairperson are appointed by the Chief Executive--> the government has an absolute power to choose the members. All the members are appointed on a personal basi --> lack of accountability of the members and the MWC 2 years review rather than 1 year --> can never catch up the inflation

The involvement of the HKCTU in the consultation Within the mechanism, the HKCTU met the PMWC three times. First meeting: mainly emphasized the MW rate should not be lower than the average amount of CSSA and the negative impact of the MW should not be exaggerated. Second meeting: the HKCTU studied the statistic data and suggested that if the hourly rate was set as HK$33, there would be very moderate influence on the economy.

Increase of wage costs （ A ） Wage as per cent of total revenue （ B ） Change of the prices of goods and services （ AX B ） Retail 3.9 per cent9.1 per cent0.4 per cent Supermarkets and convenience store 8.5 per cent7.2 per cent0.6 per cent Other retail stores 3.3 per cent9.4 per cent0.3 per cent Restaurants 7.9 per cent28.4 per cent2.2 per cent Chinese restaurants 4.8 per cent32.0 per cent1.5 per cent Non-Chinese restaurants 5.4 per cent26.3 per cent1.4 per cent Fast food cafes 17.8 per cent22.9 per cent4.1 per cent Hong Kong style tea cafes 10.7 per cent30.3 per cent3.2 per cent Estate management, security and cleaning 15.2 per cent46.4 per cent7.1 per cent Real estate maintenance management 12.0 per cent31.3 per cent3.8 per cent Security services 19.9 per cent82.7 per cent16.5 per cent Cleaning services 25.6 per cent75.6 per cent19.4 per cent Other low paying sectors 8.8 per cent22.9 per cent2.0 per cent Elderly homes 10.2 per cent55.5 per cent5.7 per cent Laundry and dry cleaning services 7.7 per cent33.3 per cent2.6 per cent Hairdressing and other personal services 11.2 per cent39.3 per cent4.4 per cent Local courier services 6.4 per cent36.7 per cent2.3 per cent Food processing & production 4.5 per cent16.0 per cent0.7 per cent Table 5.1: Impact on wage costs and surplus if the rate is set as HK$33 The PMWC did not take this

Argument before the implementation of the MW Under the existing law, if both employer and employee agree, they can change the contract terms, but many employers force their workers to sign the agreements to cancel the meal break and rest day pays. Case of Café de Coral more than 15,000 employees, chairman Mr. Michael Chan is the member of PMWC In Nov 2010, just after the announcement of the MW rate, the giant enterprise increased the wages to HK$28 per hour, but the meal break pay was cut. The catering union launched a protest and boycotted the Café de Coral The HKCTU has called for legislation to protect the meal break and rest day pay.

Current debates on the MW Whether the MW rate should be reviewed annually Trade unions : the annual review can help the wage keep up with the price indices. the government: they will only comply with the law by submitting the report within two years. The accountability and the transparency of the MWC. The unionists and even the employers describe the MWC as black-room deal- -> members are appointed on personal basis, the discussions are not open to the public The amendment of the Ordinance for including live-in domestic workers is urged Disabled concern groups request the cancellation of the assessment test on disabled employees

Impact of the MW The popular fear for the MW has evaporated after the implementation of the law. But all the statistics show that there are no negative impacts on the labour market and business at present. Also, about the business, there is no evidence that the MW has caused any major deficits. So, all the tripartite constituents agree that it was right time to introduce the MW.

Positive effects wage increase encourages the middle aged and women for working The HKCTU conducted a survey successfully interviewed 519 workers and compared their wages and benefits before and after the implementation of the MW. those who earned less than HK$28 before enjoyed a pay rise by 14.5%. cleaners have the highest pay rise to 23.7%. security guards and restaurant workers also have the pay rise to 7.8 and 7.7%. This study shows that low income workers, both earned below or near the MW rate before its implementation, are the main beneficiaries.

Collective Bargaining in HK:unionization rate and collective bargaining rates Gov. report shows that HK has a relatively good unionization rate 20.88% in 2006 to 23.19% in 2010 many workers join the union only for welfare benefits E.g. the Federation of Trade Unions (FTU ) Industry sectionDeclared membership Employed persons Unionizati on rate Transportation132,860161, % Manufacturing60,457117, % Social and personal services181,185432, % Professional and business services44,955314, % Accommodation and food services24,989255, % Import/export, wholesale and retail trades 67,286813, % Information and Communication6,45888, % Real estate7,410112, % Financing and insurance9,599196, % Total Table 6.1 Unionization rate by sector in 2010

the declared membership may include some duplication the figures, to some extent, reflect the participation of the workers in unions. the collective bargaining rates are not in line with the unionization rate and is widely believed that it is around 1% or even less of the unionised enterprises. no regulations on collective bargaining E.g. Cathy Pacific Airways, signed the agreements with the unions in 1980s. The agreements include the annual wage negotiation. But from 1998 to 2009, no negotiations were carried out. It was eventually established in 2010 under the great pressure from the unions. But it was terminated in that year by the sole announcement of the wage increase

Labour dispute cases and the negotiation of wage industries with higher unionization rate do not mean they have higher wage increase So the importance is not the unionization rate, but is whether the unions eager to mobilize their members to negotiate with the employers.

unions have realized the wage rises and more benefits can only be obtained by union struggles. E.g. after the strike in 2008, HK A.S. Watson & Company Limited Employees Union organizes their members every year to fight for a pay rise. In 2011, they successfully got the medical cards for every member and the notice board in every region of transportation of bottled waters. The difficulty of organizing industrial actions in HK: The labour laws in HK provide very few protection to the workers, employers can easily lay off “trouble makers” and workers are afraid to lose their jobs if they join the industrial actions. With no reinstatement that if the employer dismisses a worker improperly

Conclusion In the past ten years, the economy went up and down but overall, the performance was well. But the wages and the living standard have a very different story. the income gap growing wider the financing and professional sections have wages increase by 50% for the past decade, but all other industries lagged behind workers in fast food chain, sanitary, security have extremely low paid

structural problems causing the wide income gap First, the disappearance of the manufacturing led to the polarization of the labour market. Second, due to the poor labour rights, more and more employers have preferred informal employment. Third, the government cut the social welfare which is the safety net of the low income workers. Forth, the government has ignored workers’ collective bargaining rights and organization rights by refusing setting up legislations. Therefore, the introduction of the MW is the immediately measure to alleviate the poverty, to help the working poor and to narrow the income gap. The income gap between the lowest ranks and the lower middle ranks is getting closer upon the implementation of the MW. But we should not see the legislation as an ultimate victory of the workers, $28/hr is not enough for the basic living, and the coverage is yet to be satisfied.

CambodiaHong Kong The MW rateUS$61 per month (2010)Around US$746* per month MW/GDP per capita per cent (2007)28.2 per cent Poverty line31 per cent (2007)18 per cent * Assuming eight hour work per day, 26 days per month Source: CIA the World Factbook, ILO, Global Wage Report, , Table 7.1: MW and the poverty line in Cambodia and Hong Kong