Society

Minimum wage may not pay off for some

By Andrea Deng (China Daily)
Updated: 2011-05-25 08:19

Side effects

A handful of economists and prominent opponents of the minimum wage have spoken out about the side effects of the minimum wage increase, which might invite a surge of unemployment and hence greater wealth gaps. Two of the opponents are Francis Lui, professor and head of the business school of Hong Kong University of Science and Technology, and Richard Wong, economics chair at Hong Kong University.

Chong thinks the impact on employment may have been overestimated. The repercussions should have shown up as early as February, he said, because employers knew the wage increase was coming. In addition, he said, "The unemployment rate fell to a record low of 3.4 percent in March."

The trade unions federation has received more than 100 reports of employees being sacked because of the minimum wage. Most were security guards, cleaners or catering workers.

Yam said she isn't worried about unemployment. There is a widespread shortage of cleaners. The vacancy rate in the industry is between 10 and 15 percent.

Some union staff members think it is too early to speak definitively about the impact. Payrolls will not come into play until the end of May or early June.