The minimum wage legislation has been one of the most important tasks, if not the most important, of Matthew Cheung's tenure since he took up his present post as labour minister in July 2007.

After a largely unsuccessful voluntary Wage Protection Movement that saw few participating employers during a two-year period, Chief Executive Donald Tsang announced in his 2008 Policy Address the decision to legislate for a minimum wage to honor his election pledge.

The minimum wage is a very important topic, said Cheung. Equally, it is highly controversial and so the government must handle it with great care and objectivity.

At the beginning, the business sector was rather reluctant to have a statutory minimum wage in Hong Kong, citing this as violating the principles of a market economy. They also felt that the government should not meddle with the market mechanism that determines wages in accordance with supply and demand.

"It is a balancing act, " said Cheung. "The government needs to, on one hand, ensure the functioning of a free economy in Hong Kong, and to promote a just and harmonious society on the other."

The minimum wage discussions lasted for a very long time at the meetings of the Labour Advisory Board that Cheung chaired in his previous capacity of Commissioner for Labour a few years back.

As members from the employer and staff sides finally reached a consensus on the minimum wage issue, Cheung thanked the business leaders and business associations for their understanding and accommodation in accepting a statutory minimum wage in Hong Kong.

"It is not easy at all. It is a very controversial issue," he said. "The most important thing is the change of culture over the years among employers, be they big or small enterprises, as well as the spread and implementation of corporate social responsibility. They also understand that low wages are unhealthy to society."

Difficult balancing act

In February this year, the government set up the Provisional Minimum Wage Commission and charged it with the task of working out the initial minimum wage level.

In June, the government gazetted the Minimum Wage Bill and introduced it into the Legislative Council for first and second readings on July 8. A Bills Committee has been formed with as many as 36 members from pro-business, pro-labour and other backgrounds.

The committee will start vetting the bill on September 24, and will also hold a public hearing session on October 7 to solicit opinions from people from all segments of the community.

Cheung will personally attend all these meetings. "If all goes smoothly, the earliest time of the implementation of the minimum wage legislation will be late 2010 or early 2011," he anticipated.

"Using an evidence-based approach, the Provisional Minimum Wage Commission will be in a position to recommend an initial minimum wage level in mid-2010. The Commission will strive to be as objective as possible.

"Teresa Cheng, the chairperson of the Commission, is a neutral participant, without any business or labour background or connections, while the members are equally drawn from related sectors," he said.

The Provisional Minimum Wage Commission will have the assistance of the Census and Statistical Department, which is conducting a large-scale survey involving 10,000 companies and 60,000 employees regarding their age, sex, education, job category and pay levels based on the second quarter.

The surveyed information will be analyzed and handed to the Commission as a very important reference.

In the process of contemplating a minimum wage, Cheung said the government adhered to four basic principles to balance the interests of various sectors of the community.

First, it is endeavoring to prevent excessively low wages, which are not conducive to social harmony. Second, it is striving to prevent a huge loss of low-paid jobs, as that will render many people jobless and push up the unemployment rate.

Third, the government will ensure that the implementation of a minimum wage will not obstruct economic growth and fourth, that it will not blunt Hong Kong's competitive edge.

"It is very important that the initial wage level be reasonable," said the labour minister.

Cheung also took pride in the passage of a new enactment that makes defaulting in payment of wages a criminal offence as a milestone of protection of workers' rights.

Under the new legislation that was been enacted only on the last day of the 2009-10 legislative session, on July 8, defaulting employers without reasonable excuses will be liable to a maximum fine of HK$350,000 and three years imprisonment.

For many decades, the problem of wage payment defaults without remedy and redress has remained, e.g., in the form of unpaid holiday wages and severance pay, even though the Labour Tribunal has ruled in favor of the workers, because wage payment default was only a civil tort in Hong Kong, Cheung said.

The process to reclaim wages has been a very tedious one that has made employees feel very frustrated and that has aroused broad community indignation.

Looking ahead to the future, Cheung is pleased that the new legislation provides good safeguards for the workers.

"This is a real breakthrough. This new legislation, however, will not cause any problems for upright, law-abiding employers," Cheung assured. "If employers have genuine financial difficulties in paying staff salaries, they can apply to the Protection of Wages on Insolvency Fund for assistance."

Becoming a minister

A career civil servant for nearly 35 years, Matthew Cheung joined the government in 1972.

Over the past decade or so, he has been deeply involved in labour affairs, serving as Commissioner of Labour from 1999-2000, as well as doubling up as Commissioner of Labour and Permanent Secretary for Economic Development and Labour from 2002 to 2007.

He retired from the civil service in March 2007.

A few months later, he made a quick return to become a political appointee and a member of Chief Executive Donald Tsang's new cabinet as Secretary for Labour and Welfare on July 1, 2007.

Cheung talked about his political appointment for the first time during the interview: "I retired in 2007 because I had chosen to retire at the age of 55 under the old civil service pension rule.

"It was for just three months. The government invited me to come back because of the coincidence of the timing and I regarded this an invaluable opportunity for me to continue to serve the community and the SAR government and do the work I like."

Being attentive and responsive to labour voices, Cheung is liked by the trade unions, but this has left some members of the business sectors calling him as favoring the labour sector.

"I will not favor any side. Some people from the business community who think that I am taking the side of the labour sector do not understand me," he said mildly, without showing signs of being annoyed.

"It is most important for me, as the most senior official responsible for labour affairs, to be objective and impartial.

"Among various labour issues, the single issue I am most concerned with is the protection of workers' rights and I will give zero tolerance to the violation of the rights of workers, such as wage defaulting, because workers have every right to be paid for the work done," he explained.

"However, improvement of terms and conditions of employment or pay increase is a separate issue. Improvement of workers' rights must be reasonable and agreed between the employers and employees," he added.

(HK Edition 08/21/2009 page4)