Minimum wage, maximum strife

After the tortuous rounds of hair-tearing, teeth-gnashing and mouth-frothing over whether the Freest Economy in the Solar System’s statutory minimum wage should be HK$20, HK$28 or HK$33, most innocent bystanders had assumed that the long-awaited labour policy would come into effect on the socialist festival of 1 May 2011 with relatively little fanfare. Libertarian idealists would bemoan the loss of every free man’s right to sell his toil for as tiny a handful of rice as he should wish. Worshipers of the working class would rail against the inadequate level of the hourly wage floor (28 bucks, a split-the-difference sum chosen by Solomon-like officials to annoy everyone equally). Freethinkers would shrug in despair at a government piling yet another market distortion onto our uneven economic playing field in order to avert either reform or revolt. Some of the scummiest and most ineptly run businesses in town would lay off staff or close. Fast-food chains would introduce told-you-so price hikes to pass on the extra costs to their high-school student and office-fodder customer base. And that would be it. Life would go on.

But the innocent bystanders were reckoning without the genius of Hong Kong’s bureaucrats and policymakers. The whole idea of a minimum wage, officials insisted, was to outlaw starvation wages while minimizing job losses (and sustaining growth and competitiveness to boot). They said this with the same unconvincing grins they sport when they declare, in essence, that home prices are too high but mustn’t fall. In real life, however, there is only one way to introduce universally benign, ‘win-win’ policies that deliver prizes for all and harm no-one’s interests – and that is to overlook awkward details. In this case, our leaders assumed no-one would fuss too much about how lunch-breaks and days off, which no-one thinks about when pay is x thousand bucks a month, would fit into an hourly minimum wage system.

Yet fuss people did. The Hong Kong Federation of Employers issued a blood-curdling warning to its members that in theory this could mean workers on minimum wage getting “…nearly HK$41 per hour worked!” Note their exclamation mark, suggesting the full horror of a minimum wage that is 28% of per-capita GDP rather than 19% (but best not look at how most developed countries have a benchmark nearer 40% or more). The labour lobby warned of the opposite happening: employers currently paying above HK$28 an hour using the new law as an excuse to ‘stop’ paying staff during lunch breaks.

The government’s response was to issue a hand-wringing plea for everyone to be nice and strive for consensus. It then suggested that it would address the problem in its own backyard – the menial jobs it outsources to the private sector – in the way only the Hong Kong government can: dipping into the magic bottomless pit of taxpayers’ money and flinging cash all over the place, so both contractors and their staff are happy. As for the rest of the city’s employers and employees, here’s a hastily produced booklet. If we had meant HK$41 an hour, we’d have said HK$41 an hour; if we had meant pay cuts, we’d have said pay cuts. It gives easy-to-understand examples. It advises everyone to use common sense. It has pictures of deliriously joyous and mutually adoring bosses and unskilled workers smiling a lot on the cover. If that doesn’t spread instant harmony everywhere, what will?